Question

Amar, Asit and Mohit are partners in a firm sharing profits and losses in the proportion 3 : 1 : 1 respectively. Their Balance Sheet as on 31st March, 2023 is as shown below:

Balance Sheet as on 31st March, 2023
Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	80,000	Bank	25,000
General Reserve	1,00,000	Debtors	1,20,000
Bills Payable	50,000	Livestock	1,00,000
Capital Accounts:		Building	1,50,00
Amar	2,50,000	Plant and Machinery	70,000
Asit	2,00,000	Motor Truck	2,00,000
Mo hit	1,00,000	Goodwill	1,15,000
	7,80,000		7,80,000

On 1st April, 2023 Mohit retired and the following adjustments have been agreed upon:

(I) Goodwill was revalued on ₹ 1,00,000.

(2) Assets and Liabilities were revalued as follows:"
Debtors ₹ 1,00,000, Livestock ₹ 90,000, Building ₹ 2,50,000, Plant and Machinery ₹ 60,000, Motor truck ₹ 1,90,000 and Creditors ₹ 60,000.

(3) Amar and Asit contributed additional capital through Net Banking of ₹ 1,00,000 and ₹ 50,000 respectively.

(4) Balance of Mohit's Capital Account is transferred to his Loan Account. Give Journal entries in the books of new firm

Answer 1

In the books of Amar, Asit and Mohit Journal entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2023
April 1	General Reserve A/c   ...Dr.		1,00,000	-
	To Amar’s Capital A/c		-	60,000
	To Asit’s Capital A/c		-	20,000
	To Mohit’s Capital A/c		-	20,000
	(Being General Reserve distributed among partners)
1	Revaluation A/c   ...Dr.		65,000	-
	To Debtors A/c		--	20,000
	To Live Stock A/c		-	10,000
	To Plant and Machinery A/c		-	10,000
	To Motor Truck A/c		-	10,000
	To Goodwill A/c		-	15,000
	(Being assets depreciated)
1	Building A/c   ...Dr.		1,00,000	-
	Creditors A/c   ...Dr.		20,000	-
	To Revaluation A/c		-	1,20,000
	(Being Building appreciated and Creditors amount is payable less)
1	Revaluation A/c   ...Dr.		55,000	-
	To Amar’s Capital A/c		-	33,000
	To Asit’s Capital A/c		-	11,000
	To Mohit’s Capital A/c		-	11,000
	(Being Profit on revaluation distributed and transferred to Partners’ Capital accounts)
1	Bank A/c   ...Dr.		1,50,000	-
	To Amar’s Capital A/c		-	1,00,000
	To Asit’s Capital A/c		-	50,000
	(Being additional capital brought by partners)
1	Mohit’s Capital A/c   ...Dr.		1,31,000	-
	To Mohit’s Loan A/c		-	1,31,000
	(Being balance of Mohit’s Capital A/c transferred to Mohit’s Loan A/c)

Working Notes :

(1) Calculation of Profit on Revaluation of Assets and Liabilities.

Dr.	Revaluation Account			Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)
To Debtors A/c		20,000	By Building A/c	1,00,000
To Livestock A/c		10,000	By Creditors A/c	20,000
To Plant and Machinery A/c		10,000
To Motor Truck A/c		10,000
To Goodwill A/c		15,000
To Partners’ Capital A/c: Profit
Amar	33,000
Asit	11,000
Mohit	11,000
		1,20,000		1,20,000

 

Dr.	Partners’ Capital Accounts						Cr.
Particulars	Amar	Asit	Mohi	Particulars	Amar	Asit	Mohi
To Mohit’s Loan A/c	-	-	1,31,000	By Balance b/d	2,50,000	2,00,000	1,00,000
To Balance c/d	4,43,000	2,81,000	-	By General Reserve A/c	60,000	20,000	20,000
				By Revaluation A/c (Profit)	33,000	11,000	11,000
				By Bank A/c	1,00,000	50,000	-
	4,43,000	2,81,000	1,31,000		4,43,000	2,81,000	1,31,000