Question

Ayushi and Shristhi are partners sharing profits in 3 : 2. Their Balance Sheet showed Stock at ₹ 3,10,000; Machinery at ₹ 4,95,000; Debtors at ₹ 6,00,000; Creditors at 3,47,000. They admit Tina as a partner, and a new profit-sharing ratio is agreed at 4 : 3 : 2. The following terms were agreed:

1. Machinery is overvalued by 10%.
2. Unrecorded debtors of ₹ 20,000 be brought into books and provision for doubtful debts be created at 10%.
3. Creditors of ₹ 27,000 are not likely to be paid.

Shristhi’s share in loss on revaluation amounted to ₹ 36,000. You are required to calculate the revalued value of stock.

Hint: Loss on Revaluation ₹ 90,000.

Answer 1

Dr.	Revaluation Account				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Machinery A/c (overvalued)		45,000	By Unrecorded Debtors A/c		20,000
To Stock A/c		30,000	By Creditors A/c (not payable		27,000
To Provision for Doubtful Debts A/c		62,000	By Loss on Revaluation transferred to:
			Ayushi’s Capital A/c	54,000
			Shristhi’s Capital A/c	36,000	90,000
		1,37,000			1,37,000

Working Note:

Shristhi’s share in loss on revaluation = ₹ 36,000

Hence, total loss on revaluation = `36,000 xx 5/2`

= 90,000

Machinery = `4,95,000 xx 100/110`

4,95,000 − 4,50,000

= 45,000

Debtors: Unrecorded debtors of ₹ 20,000 are brought into the books. This is a gain

Provision for Doubtful Debts = 6,00,000 + 20,000

= 6,20,000

= `6,20,000 xx 10/100`

= 62,000

Creditors: Creditors of ₹ 27,000 are not likely to be paid. This is a gain

Calculate the net change from these items:

Total Losses = 45,000 + 62,000

= 1,07,000

Total Gains = 20,000  + 27,000

= 47,000

Net Loss = 1,07,000 − 47,000

= 60,000

The total loss on revaluation is ₹ 90,000. The net loss from all other items is ₹ 60,000.

Loss on Stock = 90,000 − 60,000

= 30,000

Revalued Value of Stock = 3,10,000 − 30,000

= 2,80,000