Anita, Sunita and Kavita were partners sharing profits and losses in the ratio 3:3:2. Their Balance Sheet as on 31st March 2013 is as below: Balance Sheet as on 31st March, 2013. Liabilities Amount (₹) Assets Amount (₹) Capital Accounts 11,000 Building 10,000 Anita 15,000 Machinery 10,700 Sunita 8,000 Furniture 10,000 Kavita 10,000 Debtors 5,000 Creditors 10,900 Stock 6,600 Reserve fund 4,000 Cash 6,600 On 1st April, 2013, Mrs. Kavita retired from the firm on the following terms: Goodwill of the firm is to be valued at ₹4,000, however, only Kavita’s share in it is to be raised in the books and written off immediately. Assets to be revalued as under:Stock ₹6,300; Machinery ₹10,000; Furniture ₹10,200. R.D.D. to be maintained at 10% on debtors. ₹100 to be written off from creditors. The amount payable to Mrs. Kavita is to be transferred to her loan account. Prepare: Profit and loss adjustment account. Partner’s capital account, and Balance Sheet of new firm as on 01.04.2013.

Profit & Loss Adjustment: Changes on 01-04-2013: Stock ↓ to ₹6,300 ⇒ Loss ₹300Machinery ↓ to ₹10,000 ⇒ Loss ₹700Furniture ↑ to ₹10,200 ⇒ Gain ₹200R.D.D. @ 10% on Debtors ₹5,000 ⇒ Provision ₹500 (Loss)Creditors: write off ₹100 ⇒ Gain ₹100 net revaluation loss = (300 + 700 + 500) − (200 + 100) = ₹1,200 Dr. Profit & Loss Adjustment A/c Cr. Particulars Amount (₹) Particulars Amount (₹) To Stock 300 By Furniture 200 To Machinery 700 By Creditors (write-back) 100 To R.D.D. 500 To Partners’ Capital A/cs (Reval loss): A 450; S 450; K 300 1,200 Total 2,700 Total 2,700 Partners’ Capital: Reserve Fund ₹4,000 in old ratio 3:3:2 ⇒ A ₹1,500; S ₹1,500; K ₹1,000. Goodwill of firm ₹4,000; only Kavita’s share (2/8) = ₹1,000 Debit Anita ₹500, Debit Sunita ₹500, Credit Kavita ₹1,000. Partners’ Capital A/c Particulars Anita (₹) Sunita (₹) Kavita (₹) To Revaluation A/c (loss) 450 450 300 To Goodwill A/c (Kavita’s share written off) 500 500 - To Kavita Loan A/c - - 11,700 By Balance b/d 15,000 8,000 10,000 By Reserve Fund 1,500 1,500 1,000 By Goodwill A/c - - 1,000 Balance c/d 15,550 8,550 - Total 17,550 9,550 12,000 Check (Kavita): 10,000 + 1,000 + 1,000 − 300 = ₹11,700 Balance Sheet of New Firm: Balance Sheet of New Firm as at 01-04-2013 Liabilities Amt. (₹) Amt. (₹) Assets Amt. (₹) Amt. (₹) Creditors (10,900 − 100) 10,800 Building 10,000 Bills Payable (assumed omitted item) 1,000 Machinery (revalued) 10,000 Kavita Loan A/c 11,700 Furniture (revalued) 10,200 Capital A/cs: Debtors 5,000 − R.D.D. 500 4,500 -Anita 15,550 Stock (revalued) 6,300 -Sunita 8,550 24,100 Cash 6,600 Total 47,600 Total 47,600

Anita, Sunita and Kavita were partners sharing profits and losses in the ratio 3:3:2. Their Balance Sheet as on 31st March 2013 is as below:

Question

Anita, Sunita and Kavita were partners sharing profits and losses in the ratio 3:3:2. Their Balance Sheet as on 31st March 2013 is as below:

Balance Sheet as on 31st March, 2013.
Liabilities	Amount (₹)	Assets	Amount (₹)
Capital Accounts	11,000	Building	10,000
Anita	15,000	Machinery	10,700
Sunita	8,000	Furniture	10,000
Kavita	10,000	Debtors	5,000
Creditors	10,900	Stock	6,600
Reserve fund	4,000	Cash	6,600

On 1st April, 2013, Mrs. Kavita retired from the firm on the following terms:

Goodwill of the firm is to be valued at ₹4,000, however, only Kavita’s share in it is to be raised in the books and written off immediately.
Assets to be revalued as under:
Stock ₹6,300; Machinery ₹10,000; Furniture ₹10,200.
R.D.D. to be maintained at 10% on debtors.
₹100 to be written off from creditors.
The amount payable to Mrs. Kavita is to be transferred to her loan account.

Prepare:

Profit and loss adjustment account.
Partner’s capital account, and
Balance Sheet of new firm as on 01.04.2013.

Ledger

Solution

Profit & Loss Adjustment:

Changes on 01-04-2013:

Stock ↓ to ₹6,300 ⇒ Loss ₹300
Machinery ↓ to ₹10,000 ⇒ Loss ₹700
Furniture ↑ to ₹10,200 ⇒ Gain ₹200
R.D.D. @ 10% on Debtors ₹5,000 ⇒ Provision ₹500 (Loss)
Creditors: write off ₹100 ⇒ Gain ₹100

net revaluation loss = (300 + 700 + 500) − (200 + 100) = ₹1,200

Dr.	Profit & Loss Adjustment A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Stock	300	By Furniture	200
To Machinery	700	By Creditors (write-back)	100
To R.D.D.	500
To Partners’ Capital A/cs (Reval loss): A 450; S 450; K 300	1,200
Total	2,700	Total	2,700

Partners’ Capital:

Reserve Fund ₹4,000 in old ratio 3:3:2 ⇒ A ₹1,500; S ₹1,500; K ₹1,000.

Goodwill of firm ₹4,000; only Kavita’s share (2/8) = ₹1,000

Debit Anita ₹500, Debit Sunita ₹500, Credit Kavita ₹1,000.

Partners’ Capital A/c
Particulars	Anita (₹)	Sunita (₹)	Kavita (₹)
To Revaluation A/c (loss)	450	450	300
To Goodwill A/c (Kavita’s share written off)	500	500	-
To Kavita Loan A/c	-	-	11,700
By Balance b/d	15,000	8,000	10,000
By Reserve Fund	1,500	1,500	1,000
By Goodwill A/c	-	-	1,000
Balance c/d	15,550	8,550	-
Total	17,550	9,550	12,000

Check (Kavita): 10,000 + 1,000 + 1,000 − 300 = ₹11,700

Balance Sheet of New Firm:

Balance Sheet of New Firm as at 01-04-2013
Liabilities	Amt. (₹)	Amt. (₹)	Assets	Amt. (₹)	Amt. (₹)
Creditors (10,900 − 100)		10,800	Building		10,000
Bills Payable (assumed omitted item)		1,000	Machinery (revalued)		10,000
Kavita Loan A/c		11,700	Furniture (revalued)		10,200
Capital A/cs:			Debtors 5,000 − R.D.D. 500		4,500
-Anita	15,550		Stock (revalued)		6,300
-Sunita	8,550	24,100	Cash		6,600
Total		47,600	Total		47,600

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Partnership Final Accounts

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Trial Balance as on 31st March , 2009

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Capital A/c's Ajay Vijay		60000 35000
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Trial Balance as on 31st March, 2010
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Purchases	30,000	Sanjay	40,000
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Bills Receivable	8,000
Insurance	2,000
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