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Solution - A, B and C Were Partners in a Firm Sharing Profit in the Ratio of 3:2:1. on 31-3-2015 Their Balance Sheet Was as Follows - Preparation of Revaluation Account and Balance Sheet

ConceptPreparation of Revaluation Account and Balance Sheet

Question

A, B and C were partners in a firm sharing profit in the ratio of 3:2:1. On 31-3-2015 their Balance sheet was as follows :

                                             Balance Sheet of A,B and C as on 31-3-2015

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

Bills Payable

 

Capitals

    A                                    1,00,000

    B                                       50,000

    C                                       25,000      

General Reserve

50,000

20,000

 

 

 

 

1,75,000

30,000

Land

Building

Plant

Stock

Debtors

Bank

 

 

50,000

50,000

1,00,000

40,000

30,000

5,000

 

 

   2,75,000    2,75,000

On the above date D was admitted as new partner and it was decided that: 

(i) Goodwill of the firm will be valued at 1,50,000

(ii) Land will be revalued at 80,000 and building be depreciated by 60%.

(iii) Creditors of 6,000 were not likely to be claimed and hence should be written off

Prepare Revaluations Account, Partner’s Capital Accounts and Balance Sheet of the reconstitute firm.

Solution

                                                             Revaluation Account

Dr.                                                                                                                                   Cr

Particulars

Amount

Rs

Particulars

Amount

Rs

Building A/c

Revaluation Profit

        A                      16,500

        B                      11,000

        C                        5,500      

 

 

3,000

 

 

 

33,000

 

Land A/c

Creditors A/c

 

 

 

 

 

30,000

6,000

 

 

 

 

36,000 36,000
   

 

                                                                  Partner’s Capital Account

Dr.                                                                                                                                                                          Cr.

Particulars

A

Rs

B

Rs

C

Rs

Particulars

A

Rs

B

Rs

C

Rs

A’s Capital A/c

 

 

Balance c/d

 

 

 

 

 

1,56,500

 

 

 

71,000

25,000

 

 

10,500

Balance B/d

R/V Profit

General Reserve

C’s Capital A/c

 

 

1,00,000

16,500

15,000

25,000

50,000

11,000

10,000

 

25,000

5,500

5,000

 

1,56,500 71,000 35,500 1,56,500 71,000 35,500
           

 

                                                                             Balance Sheet

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital

    A                                     1,56,500

    B                                        71,000

    C                                        10,500        

 

Creditors                               50,000

    Less : Written off                6,000         

 

Bills payable

 

 

 

 

 

2,38,000

 

 

44,000

 

20,000

 

 

Land                                  50,000

       Add :Increase            30,000           

Building                              50,000

      Less : Dep                     3,000          

 

Plant

Bank

Stock

Debtors

 

 

 

80,000

 

47,000

 

1,00,000

5,000

40,000

30,000

3,02,000 3,02,000

 

Working Notes

Old Ratio                       New Ratio
3 : 2 : 1                            1:1:1

S/R of A = Old Ratio - New Ratio `=3/6-1/3=1/6=>`

S/R of B = Old Ratio - New Ratio =`2/6-1/3=0/6`

S/R of C = Old Ratio - New Ratio = `1/6-1/3=-1/6=>`

C will compensate Ashok, since he is gaining

C’s Capital A/c                          Dr                 25,000

              To A’s Capital A/c                                           25,000

Is there an error in this question or solution?

APPEARS IN

2015-2016 (March) Delhi Set 3
Question 14 | 6 marks

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A. B and C were partners in a firm sharing profits in the ratio of 5: 3: 2. On 31-3-2015 their Balance Sheet was as follows:

                                                              Balance Sheet of A,B and C as on 31-3-2015

Liabilities Amount(Rs) Assets Amount(Rs.)

Creditors

Investment Fluctuation Fund

P & L Account

Capitals

     A                                                       1,50,000

     B                                                       1,20,000

     C                                                          60,000

 

 

63,000

30,000

1,20,000

 

 

 

3,30,000

 

 

Land & Building

Motor Vans

Investments

Machinery

Stock

Debtors                                                     1,20,000

       Less : Provision                                       9,000

Cash

 

1,86,000

60,000

57,000

36,000

45,000

 

 

 

 

  5,43,000   5,43,000

 

On the above date B retired and A and C agreed to continue the business on the following terms:

(1) Goodwill of the firm was valued at Rs.1, 53,000.

(2) Provision for bad debts was to be reduced by Rs.3,000.

(3) There was a claim of Rs.12,000 for workmen compensation.

(4) B will be paid Rs.24,600 in cash and the balance will be transferred to his loan account which will be paid in four equal yearly instalments together with interest 10% p.a.

(5) The new profit sharing ratio between A and C will be 3:2 and their capital will be in their new profit sharing ratio. The capital adjustments will be done by opening current accounts.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of A and C.

Solution for question: A, B and C Were Partners in a Firm Sharing Profit in the Ratio of 3:2:1. on 31-3-2015 Their Balance Sheet Was as Follows concept: Preparation of Revaluation Account and Balance Sheet. For the courses CBSE (Arts), CBSE (Commerce), CBSE (Science)
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