Kalpana and Kanika were partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2013 they admitted Karuna as a new partners for 1/5th share in the profits of the firm. The Balance Sheet of Kalpana and Kanika as on 1st April, 2013, was as follows: Balance Sheet of Kalpana and Kanika as on 1st April, 2013 Liabilities Amount Rs Assets Amount Rs Capitals Land and Building 2,10,000 Kalpana 4,80,000 Plant 2,70,000 Kanika 2,10,000 6,90,000 Stock 2,10,000 General Reserve 60,000 Debtors 1,32,000 Workmen’s Compensation Fund 1,00,000 Less: Provision –12,000 1,20,000 Creditors 90,000 Cash 1,30,000 9,40,000 9,40,000 It was agreed that(i) the value of Land and Building will be appreciated by 20%.(ii) the value of plant be increased by Rs 60,000.(iii) Karuna will bring Rs 80,000 for her share of goodwill premium.(iv) the liabilities of Workmen's Compensation Fund were determined at Rs 60,000.(v) Karuna will bring in cash as capital to the extent of `1/5`th share of the total capital of the new firm.Prepare Revaluation Account, Partner's Capital Accounts and Balance Sheet of the new firm.

Revaluation Account Dr. Cr. Particulars Amount Rs Particulars Amount Rs Revaluation Profit Land and Building A/c 42,000 Kalpana’s Capital A/c 61,200 Plant A/c 60,000 Kanika’s Capital A/c 40,800 1,02,000 1,02,000 1,02,000 Partners’ Capital Accounts Dr. Cr. Particulars Kalpana Kanika Karuna Particulars Kalpana Kanika Karuna Balance b/d 4,80,000 2,10,000 Cash 2,43,000 Balance c/d 6,49,200 3,22,800 2,43,000 General Reserve 36,000 24,000 Workmen Compensation Fund 24,000 16,000 Revaluation A/c 61,200 40,800 Premium for Goodwill 48,000 32,000 6,49,200 3,22,800 2,43,000 6,49,200 3,22,800 2,43,000 Balance Sheet as on April 01, 2012 after Karuna’s admission Liabilities Amount Rs Assets Amount Rs Creditors 90,000 Cash in Hand 4,53,000 Capitals: Debtors 1,32,000 Kalpana 6,49,200 Less: Provision for debtors 12,000 1,20,000 Kanika 3,22,800 Stock 2,10,000 Karuna 2,43,000 12,15,000 Land and Building 2,52,000 Liability for Workmen Compensation 60,000 Plant 3,30,000 13,65,000 13,65,000

Kalpana and Kanika Were Partners in a Firm Sharing Profits in the Ratio of 3 : 2. on 1st April, 2013 They Admitted Karuna as a New Partners for 1/5th Share in the Profits of the Firm.

प्रश्न

Kalpana and Kanika were partners in a firm sharing profits in the ratio of 3 : 2. On 1^st April, 2013 they admitted Karuna as a new partners for 1/5th share in the profits of the firm. The Balance Sheet of Kalpana and Kanika as on 1st April, 2013, was as follows:

Balance Sheet of Kalpana and Kanika as on 1^st April, 2013
Liabilities		Amount Rs	Assets		Amount Rs
Capitals			Land and Building		2,10,000
Kalpana	4,80,000		Plant		2,70,000
Kanika	2,10,000	6,90,000	Stock		2,10,000
General Reserve		60,000	Debtors	1,32,000
Workmen’s Compensation Fund		1,00,000	Less: Provision	–12,000	1,20,000
Creditors		90,000	Cash		1,30,000

		9,40,000			9,40,000

It was agreed that
(i) the value of Land and Building will be appreciated by 20%.
(ii) the value of plant be increased by Rs 60,000.
(iii) Karuna will bring Rs 80,000 for her share of goodwill premium.
(iv) the liabilities of Workmen's Compensation Fund were determined at Rs 60,000.
(v) Karuna will bring in cash as capital to the extent of `1/5`th share of the total capital of the new firm.

Prepare Revaluation Account, Partner's Capital Accounts and Balance Sheet of the new firm.

उत्तर

Revaluation Account
Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Revaluation Profit			Land and Building A/c	42,000
Kalpana’s Capital A/c	61,200		Plant A/c	60,000
Kanika’s Capital A/c	40,800	1,02,000

		1,02,000		1,02,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	Kalpana	Kanika	Karuna	Particulars	Kalpana	Kanika	Karuna
				Balance b/d	4,80,000	2,10,000
				Cash			2,43,000
Balance c/d	6,49,200	3,22,800	2,43,000	General Reserve	36,000	24,000
				Workmen Compensation Fund	24,000	16,000
				Revaluation A/c	61,200	40,800
				Premium for Goodwill	48,000	32,000

	6,49,200	3,22,800	2,43,000		6,49,200	3,22,800	2,43,000

Balance Sheet as on April 01, 2012 after Karuna’s admission
Liabilities		Amount Rs	Assets		Amount Rs
Creditors		90,000	Cash in Hand		4,53,000
Capitals:			Debtors	1,32,000
Kalpana	6,49,200		Less: Provision for debtors	12,000	1,20,000
Kanika	3,22,800		Stock		2,10,000
Karuna	2,43,000	12,15,000	Land and Building		2,52,000
Liability for Workmen Compensation		60,000	Plant		3,30,000
		13,65,000			13,65,000

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Notes

Karuna is admitted for 1/5th share
Let the total share of the firm be 1
Remaining share= `1-1/5=4/5`

This remaining share will be shared among old partners in their old ratio i.e. 3 : 2
Kalpana's Share=`4/5xx3/5=12/25`

Kanika's Share =`4/5xx2/5=8/25` $= \frac{4}{5} \times \frac{2}{5} = \frac{8}{25}$

New Ratio=`12:8:5`

Calculation of Sacrificing Ratio
Sacrificing Ratio = Old Ratio – New Ratio

Kalpana= `3/5-12/25=3/25`

Kanika = `2/5-8/25=2/25`

Sacrificing Ratio = 3 : 2

Adjusted Capital of Kalpana = 6.49,200
Adjusted Capital of Kanika = 3,22,800
Total Adjusted Capital = 9,72,000 (6,49,200+3,22,800)

Karuna's Capital= Adjusted Capital of kalpana and kanika`xx`karuna's share`xx` Reciprocal of thee firm's share

Karuna's Capital= `9,72,000xx1/5xx5/4=Rs 2,43,000`

Admission of Partner> Revaluation of Assets and Liabilities

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2013-2014 (March) Foreign Set 1 (with solutions)

Q 17.1 | 8 marks

संबंधित प्रश्‍न

Why does a firm revaluate its assets and reassess its liabilities on retirement or death of a partner?

Ramesh and Umesh were partners in a firm sharing profits in the ratio of their capitals. On 31st March, 2013 their Balance Sheet was as follows:On the above data the firm was dissolved.

Balance Sheet of Ramesh and Umesh as on 31^st March, 2013
Liabilities		Amount Rs	Assets	Amount Rs
Creditors		1,70,000	Bank	1,10,000
Workmen’s Compensation Fund		2,10,000	Debtors	2,40,000
General Reserve		2,00,000	Stock	1,30,000
Ramesh’s Current Account		80,000	Furniture	2,00,000
Capitals:			Machinery	9,30,000
Ramesh	7,00,000		Umesh’s Current Account	50,000
Umesh	3,00,000	10,00,000
		16,60,000		16,60,000

(i) Ramesh took over 50% of stock at Rs 10,000 less than book value. The remaining stock was sold at a loss of Rs 15,000. Debtors were realised at a discount of 5%.
(ii) Furniture was taken over by Umesh for Rs 50,000 and machinery was sold for Rs 4,50,000.
(iii) Creditors were paid in full.
(iv) There was an unrecorded bill for repairs for Rs 1,60,000 which was settled at Rs 1,40,000.

Prepare Realisation Account.

The gradual and permanent decrease in the value of fixed assets due to any cause.

Answer in one sentence only.

What is revaluation account?

Write the word/term or phrase which can substitute the following statement.
The account which shows change in the values of assets.

Write the word/term or phrase which can substitute the following statement.
Account which is opened to record the gains and losses on revaluation.

State 'True' or 'False'
Profit on revaluation account is distributed between the old partners on admission of a partner.

Write a word/phrase/term which can substitute the following statement.

An account opened to adjust the value of assets and liabilities at the time of admission of a partner.

Write a word/phrase/term which can substitute the following statement.

An account that is debited when the partner takes over the asset.

A and B are partners in a firm sharing profits and losses in the ratio of 1:1. C is admitted. A surrenders `1/4`th share and B surrenders `1/5`th of his share in favor of C. Calculate the new profit sharing ratio.

What does the excess of debit over credits in the Profit and Loss Adjustment Account indicate?

_____________ =`"Total profit"/"Number of years"`

Vasu and Viraj Share Profits and Losses in the Ratio of 3:2 respectively Their Balance Sheet as on 31st March 2019 was as under

Balance Sheet as on 31st March, 2019

Liabilities	Amount (₹)	Assets	Amount (₹)
Sundry Creditors	45,000	Cash at bank	750
General Reserve	30,000	Sundry debtors	66,750
Capital:		Stock	25,500
Vasu	1,08,000
Viraj	72,000
		Investment	36,000
		Plant	90,000
		Building	36,000
	2,55,000		2,55,000

They admit Hari into Partnership on 1.4. 2019 the terms being that :

1 He shall have to bring in ₹60,000 as his Capital for 1/4 share in future profits

2 Value of Goodwill of the Firm is to be fixed at The average profits for the last three years. The Profit was.

2009-10 ₹ 48,000,

2010-11 ₹ 81,000

2011-12 ₹ 73,500

Hari is unable to bring the value of the Goodwill in cash. It is decided to raise the Goodwill in the books of accounts.

3. Reserve for Doubtful Debts is to be created at ₹ 1,500.

4. Closing Stock is valued at ₹ 22,500

5. Plant and Building is to be depreciated by 5%

Prepare Profit and Loss Adjustment A/c, Capital Accounts of Partners, And Balance Sheet of the New Firm.

The following is the Balance Sheet of Om and Jay on 31st March 2018, they share profits and losses in the ratio 3:2

Balance Sheet As On 31st March 2018
Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	30,000	Cash	3,000
Capital A/c		Building	15,000
Om	21,000	Machinery	21,000
Jay	21,000	Furniture	900
Current A/c		Stock	12,300
Om	3,750	Debtors	27,000
Jay	3,450
	79,200		79,200

They take Jagdish into partnership on 1st April 2018 the terms being:

Jagdish should pay 3,000 as his share of Goodwill. 50% of goodwill withdrawn by partners in cash.
He should bring 9,000 as capital for 1/4th share in future profits.
Building to be valued at 18,000, Machinery and Furniture to be reduced by 10%.
A Provision of 5% on debtors to be made for doubtful debts.
Stock is to be taken at a value of 15,000.

Prepare profit and loss A/c, Partner’s Current A/c, Balance Sheet of the new firm.

Revaluation A/c is a _________.

How are accumulated profits and losses distributed among the partners at the time of admission of a new partner?

State whether the following will be debited or credited in the revaluation account.

Depreciation on assets
Unrecorded liability
Provision for outstanding expenses
Appreciation of assets

Amal and Vimal are partners in a firm sharing profits and losses in the ratio of 7 : 5. Their balance sheet as on 31^st March, 2019, is as follows:

Liabilities	₹	₹	Assets	₹
Capital accounts:			Land	80,000
Amal	70,000		Furniture	20,000
Vimal	50,000	1,20,000	Stock	25,000
Sundry creditors		30,000	Debtors	30,000
Profit and loss A/c		24,000	Debtors	19,000
		1,74,000		1,74,000

Nirmal is admitted as a new partner on 1.4.2018 by introducing a capital of ₹ 30,000 for 1/3 share in the future profit subject to the following adjustments.

Stock to be depreciated by ₹ 5,000
Provision for doubtful debts to be created for ₹ 3,000
Land to be appreciated by ₹ 20,000

Prepare revaluation account and capital account of partners after admission.

Rajan and Selva are partners sharing profits and losses in the ratio of 3 : 1. Their balance sheet as on 31^st March 2017 is as under:

Liabilities	₹	₹	Assets	₹
Capital accounts:			Building	25,000
Rajan	30,000		Furniture	1,000
Selva	16,000	46,000	Stock	20,000
General reserve		4,000	Debtors	16,000
Creditors		37,500	Bills receivable	3,000
			Cash at bank	12,500
			Profit and loss account	10,000
		87,500		87,500

On 1.4.2017, they admit Ganesan as a new partner on the following arrangements:

Ganesan brings ₹ 10,000 as capital for 1/5 share of profit.
Stock and furniture is to be reduced by 10%, a reserve of 5% on debtors for doubtful debts is to be created.
Appreciate buildings by 20%.

Prepare revaluation account, partners’ capital account and the balance sheet of the firm after admission.

At the time of admission of a partner, what will be the effect of the following information?

Balance in Workmen compensation reserve ₹40,000. Claim for workmen compensation ₹45,000.

A revaluation account is operated to find out the gain or loss at the time of ______

If at the time of admission, there is some unrecorded liability, it will be:

Assertion (A): At the time of admission of a partner if there is any General Reserve, Reserve Fund or the balance of Profit & Loss Account appearing in the balance sheet, it should be transferred to old partners' capital/current accounts in their old profit sharing ratio.

Reason (R): The General reserve, Reserve Fund or the Balance of Profit and Loss Account are the result of the past profits when the new partner was not admitted.

Navya and Radhey were partners sharing profits and losses in the ratio of 3 : 1. Shreya was admitted for 1/5th share in the profits. Shreya was unable to bring her share of goodwill premium in cash. The journal entry recorded for goodwill premium is given below:

Date	Particulars	LF	Debit (₹)	Credit (₹)
	Shreya’s Current A/c ...Dr.		24,000
	To Navya’s Capital A/c			8,000
	To Radhey’s Capital A/c			16,000
	(Being entry for goodwill treatment passed)

The new profit-sharing ratio of Navya, Radhey and Shreya will be ______.

The following is the Balance sheet of partners Aditya and Chaitanya on 31^st March, 2019 they share profits and losses in the ratio of 3 : 2:

Balance sheet as on 31st march 2019

Liabilities	Amount ₹	Assets	Amount ₹
Creditors	60,000	Building	30,000
Capital Accounts:		Furniture	1,800
Aditya	42,000	Machinery	42,000
Chaitanya	42,000	Stock	24,600
Current Accounts:		Debtors	54,000
Aditya	7,500	Cash	6,000
Chaitanya	6,900
	1,58,400		1,58,400

Adjustments:

They admitted Sachin into partnership on 1^st April, 2019 on the following terms:

Building to be valued at ₹ 36,000, machinery and furniture to be reduced by 10%.
Sachin should pay ₹ 6,000 as his share of Goodwill. 50% of goodwill withdrawn by partners in cash.
A provision of 5% on debtors to be made for doubtful debts.
He should bring ₹ 18,000 as capital for 1/4th share in future profit.
Stock is to be taken at the value of ₹ 30,000.

Prepare:

Profit and Loss Adjustment Account.
Partners’ Current Account.
Balance Sheet of the New Firm.

A, B and C who were sharing profits and losses in the ratio of 4:3:2 decided to share the future profits and losses in the ratio to 2:3:4 with effect from 1^st April 2023. An extract of their Balance Sheet as at 31^st March 2023 is:

Liabilities	Amount (₹)	Assets	Amount (₹)
Workmen Compensation Reserve	65,000

At the time of reconstitution, a certain amount of Claim on workmen compensation was determined for which B’s share of loss amounted to ₹ 5,000. The Claim for workmen compensation would be:

X and Y are partners in a firm with capital of ₹ 18,000 and ₹ 20,000. Z brings ₹ 10,000 for his share of goodwill, and he is required to bring proportionate capital for `1/3`rd share in profits. The capital contribution of Z will be ______.

Hansa and Kavya share profits and losses in the ratio of 3: 2 respectively. Their Balance Sheet as on 31st March, 2023 was as under:

Balance Sheet as on 31st March, 2023
Liabilities	Amount (₹)	Assets	Amount (₹)
Bills Payable	90,000	Cash at Bank	1,500
Reserve fund	60,000	Sundry Debtors	1,33,500
Capital A/c:		Stock	51,000
Hansa	2,16,000	Furniture	72,000
Kavya	1,44,000	Plant	1,80,000
		Building	72,000
	5,10,000		5,10,000

They admit Munir into partnership on 1-4-2023. The terms being that:

(1) He shall have to bring in ₹ 1,20,000 as his Capital for 1/4th share in future profits.

(2) Value of Goodwill of the firm is to be fixed at the average profits for the last three years.

The Profits were:

2019-20	₹ 96,000
2020-21	₹ 1,62,000
2021-22	₹ 1,47,000

(3) Reserve for Doubtful debts is to be created at ₹ 3,000.

(4) Closing stock is valued at ₹ 45,000.

(5) Plant and Building is to be depreciated by 5%.

Prepare Profit and Loss Adjustment Alc, Capital Accounts of Partners and Balance Sheet of the new firm.

Seeta and Geeta share profits and losses in the ratio of 3:2 in Partnership Firm. Their Balance Sheet as on 31^st March, 2020 was as under:

Balance Sheet as on 31^st March, 2020

Liabilities		Amount (₹)	Assets		Amount (₹)
Capitals:		40,500	Bank		11,250
Seeta	22,500		Bills Receivable		5,700
Geeta	18,000		Debtors	31,200	30,000
Creditors		18,750	(-) R.D.D.	1,200	30,000
Biil Payable		15,000	Stock		18,000
Bank Loan		24,000	Furniture		7,050
General Reserve		3,750	Machinery		7,500
			Building		22,500
		1,02,000			1,02,000

On 1^st April, 2020 they admitted Reeta on the following terms:

For half (1/2) share in future profit Reeta should bring ₹ 15,000 as capital and ₹ 7,500 for goodwill in cash.
Furniture should be appreciated up to ₹ 8,025 and building be appreciated by 20%.
R.D.D. is to be maintained at ₹ 1,500.
The stock is to be reduced by 10% and machinery depreciated by 5%.
Half of amount of goodwill is withdrawn by old partners.

Pass the necessary Journal Entries in the books of the firm.

Kalpana and Kanika Were Partners in a Firm Sharing Profits in the Ratio of 3 : 2. on 1st April, 2013 They Admitted Karuna as a New Partners for 1/5th Share in the Profits of the Firm.

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Kalpana and Kanika Were Partners in a Firm Sharing Profits in the Ratio of 3 : 2. on 1st April, 2013 They Admitted Karuna as a New Partners for 1/5th Share in the Profits of the Firm.

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