Question

Aman and Biswas were partners sharing profits and losses in the ratio of 3 : 2. They admitted Chetan as a new partner for 25% share. Balance sheet of Aman and Biswas was as follows as at March 31, 2023.

Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Creditors		50,000	Bank		40,000
Employee’s Provident Fund		60,000	Stock		60,000
General Reserve		40,000	Debtors	1,00,000
Investment fluctuation Reserve		50,000	Less: Provision for doubtful debts	(10,000)	90,000
Aman’s Capital		2,00,000	Furniture		1,20,000
Biswas’s Capital		1,50,000	Building		1,60,000
			Investment		50,000
			Goodwill		30,000
		5,50,000			5,50,000

Chetan was admitted on the following terms:

1. Market value of Investment is ₹ 20,000.
2. There was a bad debt amounting to ₹ 6,000 and provision for Doubtful Debts is to be maintained at ₹ 9,000.
3. Building was undervalued by 20%.
4. Stock was overvalued by 20%.
5. Goodwill of the firm was valued at ₹ 1,00,000 and Chetan brings his share of goodwill in cash.
6. Chetan was to bring ₹ 1,30,000 as capital.

Prepare the Revaluation Account and Partner’s Capital Accounts.

Answer 1

Dr.	Revaluation Account				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Stock		10,000	By Building		40,000
To Prov. for Doubtful Debts		5,000
To Partners Capital A/c(gain)
Aman	15,000
Biswas	10000	25,000
		40,000			40,000

 

Dr.	Partner’s Capital A/c						Cr.
Particulars	Aman	Biswas	Chetan	Particulars	Aman	Biswas	Chetan
To Goodwill	18,000	12,000		By Balance b/d	2,00,000	1,50,000
To Balance c/d	2,48,000	1,82,000	1,30,000	By Revaluation A/c	15,000	10,000
				By Premium for goodwill	15,000	10,000
				By General Reserve	24,000	16,000
				By Invest. Fluct. Reserve	12,000	8,000
				By Bank			1,30,000
	2,66,000	1,94,000	1,30,000		2,66,000	1,94,000	1,30,000