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At What Figures the Value of Assets and Liabilities Appear in the Books of the Firm After Revaluation Has Been Done? Show with the Help of an Imaginary Balance Sheet. - Accountancy

Answer in Brief

After revaluation has been done, the assets and liabilities appear at their current market values in the Balance Sheet of the reconstituted firm. This can be better explained with the help of the below explained example.
A and B shares profit and loss equally.
              Balance Sheet of A and B as on April 01, 2011

Liabilities Amt
(Rs.)
Assets Amt
(Rs.)
Sundry Creditors 1,00,000 Cash in Hand 8,000
Capital Accounts   Cash at Bank 28,000
A 75,000   Cash at Bank 40,000
B 75,000 150,000

Stock

36,000
   

Furniture

38,000
   

Plant and Machinery

1,00,000
  2,50,000   2,50,000

1) On that date C is admitted for 1/3rd share and brings 1,00,000 as capital.
2) The value of stock is increased by Rs 7,000.
3) A provision of Rs 2,000 has been created against Debtors.
4) Furniture revalued at Rs 35,000.
5) A machinery costing Rs 50,000 purchased is not recorded in books.
6) Rent outstanding Rs 2,000.
Prepare Revaluation Account, Partners’ Capital Account, Cash Account and Balance Sheet.

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Solution

                                                             Revaluation Account                                           
Dr.                                                                                                                                                 Cr.

Particular

Amount (Rs.)

Particular

Amount
(
Rs.)

Rent Outstanding A/c

2,000

Stock

7,000

Provision for Debtors 2,000 Machinery 50,000
Furniture 35,000

 

 

 

 

Profit transferred:

 

 

A’s Capital A/c

25,000

 

 

B’s Capital A/c

25,000

50,000

 

 

57,000

 

57,000

                  A’s Capital Account                             
Dr.                                                                                                                                                            Cr.

Date

Particular

J.F.

Amount

Rs

Date

Particular

J.F.

Amount

Rs

 

Balance c/d

 

1,00,000

 

Balance b/d

 

75,000

 

 

 

 

 

Revaluation A/c

 

25,000

 

 

 

1,00,000

 

 

 

1,00,000

                                                                   B’s Capital Account
Dr.                                                                                                                                                              Cr.

Date

Particular

J.F.

Amount

Rs

Date

Particular

J.F.

Amount

Rs

 

Balance c/d

 

1,00,000

 

Balance b/d

 

75,000

 

 

 

 

 

Revaluation A/c

 

25,000

 

 

 

 

1,00,000

 

 

 

1,00,000

                                                                    C’s Capital Account
Dr.                                                                                                                                                         Cr.

Date

Particular

J.F.

Amount

Rs

Date

Particular

J.F.

Amount

Rs

 

Balance c/d

 

1,00,000

 

Cash A/c

 

1,00,000

 

 

 

 

1,00,000

 

 

 

1,00,000

                                                                           Cash Account
Dr.                                                                                                                                                            Cr.

Date

Particular

J.F.

Amount

Rs

Date

Particular

J.F.

Amount

Rs

 

Balance b/d

 

8,000

 

Balance c/d

 

1,08,000

 

C’s Capital A/c

 

1,00,000

 

 

 

 

 

 

 

1,08,000

 

 

 

1,08,000

Balance Sheet of A, B & C as at April

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

1,00,000

Cash in hand

1,08,000

Rent Outstanding

2,000

Cash at Bank

28,000

 

 

Debtors

40,000

 

 

 

Less: Provision

2,000

38,000

Capital Account

 

 

 

A

1,00,000

 

Stock

43,000

B

1,00,000

 

Furniture

35,000

C

1,00,000

3,00,000

Plant and Machinery

1,50,000

 

4,02,000

 

4,02,000

Concept: Accounting for Revaluation of Assets and Reassessment of Liabilities
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APPEARS IN

NCERT Class 12 Accountancy - Not-for-profit Organisation and Partnership Accounts
Chapter 3 Reconstitution of a Partnership Firm – Admission of a Partner
Exercise | Q 8 | Page 164
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