Question

P, Q and R were partners in a firm sharing profit in the ratio of 7 : 2: 1. On 1^st April, 2013 their Balance Sheet was as follows:

Balance Sheet of P, Q and R as on 1st April, 2013
Liabilities		Amount Rs	Assets		Amount Rs
Capitals:			Land		12,00,000
P	9,00,000		Building		9,00,000
Q	8,40,000		Furniture		3,60,000
R	9,00,000	26,40,000	Stock		6,60,000
General Reserve		3,60,000	Debtors	6,00,000
Workmen’s Compensation Fund		5,40,000	Less provision	–30,000	5,70,000
Creditors		3,60,000	Cash		2,10,000
		39,00,000			39,00,000

 

On the above data Q retired.
The following were agreed:
(i) Goodwill of the firm was valued at Rs 12,00,000.
(ii) Land was to be appreciated by 30% and Building was to depreciated by 3,00,000.
(iii) Value of furniture was to be reduced by Rs 60,000.
(iv) The liabilities for Workmen's Compensation Fund were determined at Rs 1,40,000.
(v) Amount Payable to Q was transferred to his loan account.
(vi) Capitals of P and R were to be adjusted in their new profit sharing ratio, For this purpose current accounts of the partners will be opened.

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

Answer 1

 

Revaluation Account
Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Building		3,00,000	Land	3,60,000
Furniture		60,000
		3,60,000		3,60,000

Partners’ Capital Accounts
Dr.									Cr.
Particulars		P	Q	R	Particulars	P	Q	R
Q’s Capital A/c		2,10,000		30,000	Balance b/d	9,00,000	8,40,000	9,00,000
R Current A/c				6,75,000	General Reserve	2,52,000	72,000	36,000
					P’s Capital A/c		2,10,000
Q’s Loan A/c			12,32,000		R’s Capital A/c		30,000
Balance c/d		18,97,000		2,71,000	Workmen Compensation Fund	2,80,000	80,000	40,000
					P's Current A/c	6,75,000
		21,07,000	12,32,000	9,76,000		21,07,000	12,32,000	9,76,000

 

Balance Sheet                      as on April 01, 2012 after Q’s retirement
Liabilities	Amount Rs	Assets		Amount Rs
P’s Capital A/c	18,97,000	Land		15,60,000
Q’s Capital A/c	2,71,000	Building		6,00,000
Liability for workmen compensation	1,40,000	Furniture		3,00,000
Creditors	3,60,000	Stock		6,60,000
Q’s Loan A/c	12,32,000	Cash		2,10,000
P’s Current A/c	6,75,000	Debtors	6,00,000
		Less: Provision	30,000	5,70,000
		R’s Current A/c		6,75,000
	45,75,000			45,75,000