Question

Manu, Hary, Ali and Reshma were partners in a firm sharing profits in the ratio of 2 : 2 : 1 : 5. On 1.4.2016 their Balance Sheet was as follows: 

Balance Sheet of Manu, Hary, Ali and Reshma as on 1.4.2016
Liabilities		Amount (Rs)	Assets	Amount (Rs)
Capitals:			Fixed Assets	8,00,000
Manu	2,00,000		Current Assets	2,40,000
Hary	2,50,000
Ali	1,50,000
Reshma	3,50,000	9,50,000
Sundry Creditors		45,000
Workmen Compensation Reserve		45,000
		10,40,000		10,40,000

 

From the above date partners decided to share future profits equally. For this purpose the goodwill of the firm was valued at Rs 40,000. The partners also agreed for the following:

(i) Claims against Workmen Compensation Reserve was estimated at Rs 50,000. Fixed assets were to be depreciated by 10%.

(ii) Capitals of the partners were to be adjusted according  to the new profit sharing ratio, for this necessary cash will be brought or paid.

Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.

Answer 1

Revaluation Account
Dr.		Cr.
Particulars	Amount (Rs)	Particulars		Amount (Rs)
Depreciation on Fixed Assets A/c	80,000	Revaluation Loss
Provision for Claim against WCF	5,000	Manu	17,000
		Hary	17,000
		Ali	8,500
		Reshma	42,500	85,000
	85,000			85,000

Partners’ Capital Account
Dr.				Cr.
Particulars	Manu	Hary	Ali	Reshma	Particulars	Manu	Hary	Ali	Reshma
Revaluation A/c	17,000	17,000	8,500	42,500	Balance b/d	2,00,000	2,50,000	1,50,000	3,50,000
Reshma's Capital A/c	2,000	2,000	6,000		Manu’s Capital A/c				2,000
					Hary’s Capital A/c				2,000
					Ali’s Capital A/c				6,000
Cash A/c		14,750		1,01,250	Cash A/c	35,250		80,750
Balance c/d	2,16,250	2,16,250	2,16,250	2,16,250
	2,35,250	2,50,000	2,30,750	3,60,000		2,35,250	2,50,000	2,30,750	3,60,000

Balance Sheet
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital A/c			Fixed Assets (less dep.)		7,20,000
Manu	2,16,250		Current Assets		2,40,000
Hary	2,16,250
Ali	2,16,250
Reshma	2,16,250	8,65,000
Claim against WCF		50,000
Sundry Creditors		45,000
		9,60,000			9,60,000