Question

X and Y were partners in the profit-sharing ratio of 3 : 2. Their balance sheet as at March 31, 2022 was as follows:

Balance Sheet as at March 31, 2022
Liabilities		Amount (₹)	Assets		Amount (₹)
Creditors		56,000	Plant and Machinery		70,000
General Reserve		14,000	Buildings		98,000
Capital Accounts:			Stock		21,000
X	1,19,000	2,31,000	Debtors	42,000	35,000
Y	1,12,000		(-) Provision	7,000
			Cash in Hand		77,000
		3,01,000			3,01,000

Z was admitted for 1/6th share on the following terms:

1. Z will bring ₹ 56,000 as his share of capital but was not able to bring any amount to compensate the sacrificing partners.
2. Goodwill of the firm is valued at ₹. 84,000.
3. Plant and Machinery were found to be undervalued by ₹ 14,000 Building was to be brought up to ₹ 1,09,000.
4. All debtors are good.
5. Capitals of X and Y will be adjusted on the basis of Z’s share and adjustments will be done by opening necessary current accounts.

You are required to prepare revaluation account and partners’ capital account.

Answer 1

Dr.	Revaluation Account			Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
To Partner’s Capital A/c:			Plant and Machinery A/c	14,000
X	19,200	32,000	Buildings A/c	11,000
Y	12,800		Provisions for Doubtful Debt A/c	7,000
		32,000		32,000

 

Dr.	Partner’s Capital Accounts						Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
Y’s Current A/c	-	24,000	-	Balance b/d	1,19,000	1,12,000	-
Balance c/d	1,68,000	1,12,000	56,000	Bank A/c	-	-	56,000
				Z’s Current A/c	8,400	5,600	-
				General Reserve A/c	8,400	5,600	-
				Revaluation A/c	19,200	12,800	-
				X’s Current A/c	13,000	-	-
	1,68,000	1,36,000	56,000		1,68,000	1,36,000	56,000