Question

Prina, Qadir and Kian were partners in a firm sharing profits in the ratio of 7 : 2 : 1. On 31^st March, 2023 their Balance Sheet was as follows:

Balance Sheet of Prina, Qadir and Kian as on 31st March, 2023
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capitals:			Land		12,00,000
Prina	9,60,000	27,00,000	Building		9,00,000
Qadir	8,40,000		Furniture		3,60,000
Kian	9,00,000		Stock		6,60,000
General Reserve		3,00,000	Debtors	6,00,000	5,70,000
Workmen’s compensation Reserve		5,40,000	Less: Provision for doubtful debts	30,000
Creditors		3,60,000	Cash at Bank		2,10,000
		39,00,000			39,00,000

On the above date Qadir retired on the following terms:

1. Goodwill of the firm was valued at ₹ 12,00,000.
2. Land was to be appreciated by 30% and building was to be depreciated by ₹ 3,54,000.
3. A provision of 6% is to be maintained on debtors.
4. Liability for workmen's compensation was determined at ₹ 1,40,000.
5. Amount payable to Qadir was transferred to his loan account.
6. Total capital of the new firm was fixed at ₹ 16,00,000 which will be adjusted according to their new profit ratio by opening current accounts.

Prepare Revaluation Account and Partners' Capital Accounts

Answer 1

Dr.	Revaluation Account		Cr.
Particulars	(₹)	Particulars	(₹)
To Building	3,54,000	By Land	3,60,000
To Provision for doubtful debts	6,000
	3,60,000		3,60,000

 

Dr.	Partner’s Capital Account						Cr.
Particulars	Prina	Qadir	Kian	Particulars	Prina	Qadir	Kian
To Qadir’s Capital A/c	2,10,000	-	30,000	By Balance b/d	9,60,000	8,40,000	9,00,000
To Qadir’s Loan A/c	-	12,20,000	-	By General Reserve A/c	2,10,000	60,000	30,000
To Balance c/d	12,40,000	-	9,40,000	By WCR	2,80,000	80,000	40,000
				By Prina’s Capital A/c	-	2,10,000	-
				By Kian’s Capital A/c	-	30,000	-
	14,50,000	12,20,000	9,70,000		14,50,000	12,20,000	9,70,000
To Kian’s Current A/c	-	-	7,40,000	By Balance b/d	12,40,000	-	9,40,000
To Balance c/d	14,00,000	-	2,00,000	By Prina Current A/c	1,60,000	-	-
	14,00,000		9,40,000		14,00,000		9,40,000

Qadir’s Goodwill = 12,00,000 × `2/10` = 2,40,000

New PSR = 7 : 1

Gaining ratio = 7 : 1