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Question
A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their Balance Sheet as on 31st March, 2015 was as follows:
| Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
|
| Creditors | 50,000 | Land | 50,000 | |
| Bills Payable | 20,000 | Building | 50,000 | |
| General Reserve | 30,000 | Plant | 1,00,000 | |
| Capital A/cs: | Stock | 40,000 | ||
| A | 1,00,000 | Debtors | 30,000 | |
| B | 50,000 | Bank | 5,000 | |
| C | 25,000 | 1,75,000 | ||
| 2,75,000 | 2,75,000 | |||
From 1st April, 2015, A, B and C decided to share profits equally. For this it was agreed that:
(i) Goodwill of the firm will be valued at ₹ 1,50,000.
(ii) Land will be revalued at ₹ 80,000 and building be depreciated by 6%.
(iii) Creditors of ₹ 6,000 were not likely to be claimed and hence should be written off.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the reconstituted firm.
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Solution
Revaluation Account
|
Dr. |
Cr. |
|||
|
Particulars |
Amount (Rs) |
Particulars |
Amount (Rs) |
|
|
Building A/c |
3,000 |
Land A/c |
30,000 |
|
|
Revaluation Profit |
|
Creditors A/c |
6,000 |
|
|
A |
16,500 |
|
|
|
|
B |
11,000 |
|
|
|
|
C |
5,500 |
33,000 |
|
|
|
|
36,000 |
|
36,000 |
|
Partners’ Capital Account
|
Dr. |
Cr. |
||||||
|
Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
|
A’s Capital A/c |
|
|
25,000 |
Balance b/d |
1,00,000 |
50,000 |
25,000 |
|
Balance c/d |
1,56,500 |
71,000 |
10,500 |
R/v Profit |
16,500 |
11,000 |
5,500 |
|
|
|
|
|
General Reserve |
15,000 |
10,000 |
5,000 |
|
|
|
|
|
C’s Capital A/c |
25,000 |
|
|
|
|
1,56,500 |
71,000 |
35,500 |
|
1,56,500 |
71,000 |
35,500 |
Balance Sheet
as on March 31, 2015
|
Liabilities |
Amount (Rs) |
Assets |
Amount (Rs) |
||
|
Capital A/c |
|
Land |
50,000 |
|
|
|
A |
1,56,500 |
|
Add: Increase |
30,000 |
80,000 |
|
B |
71,000 |
|
Building |
50,000 |
|
|
C |
10,500 |
2,38,000 |
Less: Dep. |
3,000 |
47,000 |
|
|
|
Plant |
1,00,000 |
||
|
Creditors |
50,000 |
|
Bank |
5,000 |
|
|
Less: Written-off |
6,000 |
44,000 |
Stock |
40,000 |
|
|
Bills Payable |
20,000 |
Debtors |
30,000 |
||
|
|
3,02,000 |
|
3,02,000 |
||
Working Notes :
Old ratio New ratio
`3: 2: 1` `1: 1: 1`
S/R of A = Old ratio - New ratio = `3/6 -1/3 = 1/6` (sacrificing)
S/R of B = Old ratio - New ratio = `2/6 -1/3 = 0/6`
S/R of C = Old ratio - New ratio = `1/6 -1/3 = 1/6` (Gaining)
C will compensate A, since he is gaining
C's capital A/c Dr. 25,000
To A's capital A/c 25,000
