Question

Madhav and Girdhari were partners in a firm sharing profits and losses in the ratio of 3:1. Their balance sheet as at 31^st March; 2022 was as follows :

Balance Sheet of Madhav and Girdhari as on 31st March, 2022
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capital:			Machinery		4,70,000
Madhav	3,00,000	5,00,000	Investment		1,10,000
Girdhari	2,00,000		Debtors	1,20,000	1,10,000
Workmen's Compensation Fund		60,000	Less: Provision for Doubtful Debts	10,000
Creditors		1,90,000	Stock		1,40,000
Employee's Provident Fund		1,10,000	Cash		30,000
		8,60,000			8,60,000

On 1^st April, 2022, they admitted Jyoti into partnership for 1/4^th share in the profits of the firm. Jyoti brought ₹ 1,86,000 as her capital and ₹ 40,000 as her of goodwill premium in cash. The following terms were agreed upon: 

1. Stock was found undervalued by ₹ 23,000.
2. 20% of the investments were taken over by Girdhari at book value.
3. Claim on account of workmen's compensation amounted to ₹ 70,000, which was to be paid later.
4. Creditor included a sum of ₹ 27,000 which was not likely to be claimed. 

Prepare Revaluation A/c and Partners' Capital Accounts on Jyoti's admission.

Answer 1

Dr.	Revaluation Account				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Claim on Workmen Compensation Fund		10,000	By Stock A/c		23,000
To Revaluation Profit Transferred to:			By Creditors A/c		27,000
Madhav's Capital A/c	30,000	40,000
Girdhari's capital A/c	10,000
		50,000			50,000

 

Dr.	Partners' Capital Accounts						Cr.
Particulars	Madhav (₹)	Girdhari (₹)	Jyoti (₹)	Particulars	Madhav (₹)	Girdhari (₹)	Jyoti (₹)
To Investments A/c	-	22,000	-	By Balance b/d	3,00,000	2,00,000	-
To Balance c/d	3,60,000	1,98,000	1,86,000	By Revaluation A/c	30,000	10,000	-
				By Cash A/c	-	-	1,86,000
				By Premium of Goodwill A/c	30,000	10,000	-
	3,60,000	2,20,000	1,86,000		3.60,000	2,20,000	1,86,000

 

Dr.	Cash Account  as at 1st April, 2022		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	30,000	By Balance c/d	2,56,000
To Jyoti Capital A/c	1,86,000
To Premium for Goodwill A/c	40,000
	2,56,000		2,56,000

 

Balance Sheet  as at 1st April, 2022
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capital A/c:			Machinery		4,70,000
Madhav	3,60,000	7,44,000	Investment	1,10,000	88,000
Girdhari	1,98,000		Less:	(22,000)
Jyoti	1,86,000		Debtors	1,20,000	1,10,000
Workmen Compensation Reserve		70,000	Less: Provision for doubtful debts	(10,000)
Creditors		1,63,000	Stock	1,40,000	1,63,000
Employee's Provident Fund		1,10,000	Add: Revaluation	23,000
			Cash		2,56,000
		10,87,000			10,87,000