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Solution - Ajay, Aman and Anand were partners in a firm sharing profits in the ratio of 5:1:4. Their Balance Sheet as on 31-3-2015 was as follows - Preparation of Revaluation Account and Balance Sheet

ConceptPreparation of Revaluation Account and Balance Sheet

Question

Ajay, Aman and Anand were partners in a firm sharing profits in the ratio of 5:1:4. Their Balance Sheet as on 31-3-2015 was as follows :

                                              Balance Sheet of Ajay,Aman and Anand as on 31-3-2015

Liabilities Amount(Rs.) Assets Amount(Rs.)

Creditors

Bills Payable

General Reserve

Capitals

      Ajay                                      5,00,000

      Aman                                     1,00,000

      Anand                                    1,60,000

1,47,000

33,000

2,10,000

 

 

 

7,60,000

Land

Building

Plant

Stock

Debtors

Bank

 

5,40,000

2,70,000

1,90,000

75,000

60,000

15,000

 

  11,50,000   11,50,000

From 1-4-2015 Ajay. Aman and Anand decided to share future profits equally. For this it was agreed that:

(i) Goodwill of the firm be valued at Rs1, 80,000.

(ii) Land be revalued at Rs.6,00,000 and building be depreciated by 10%.

(iii) Creditors of Rs.15,000 were not likely to be claimed and hence be written-off.

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

Solution

                                                         Revaluation Account

Dr.                                                                                                                                                    Cr.

Particulars Amount(Rs.) Particulars Amount(Rs.)

To Building A/c

To Revaluation Profit A/c

          Ajay                        24,000

          Aman                        4,800

          Anand                      19,200

27,000

 

 

 

48,000

By Land A/c

By Creditors A/c

 

 

 

60,000

15,000

 

 

 

  75,000   75,000

 

Partner’s Capital Account

Dr.                                                                                                                                                                                                               Cr.

Particulars Ajay(Rs.) Aman(Rs.) Anand(Rs) Particulars Ajay(Rs.) Aman(Rs.) Anand(Rs)

Ajay’s Capital A/c

Anand’s Capital A/c

Balance c/d

 

 

 

6,59,000

 

30,000

12,000

83,800

 

 

 

2,75,200

 

Balance B/d

R/V Profit

General Reserve

Aman’s Cap. A/c

5,00,000

24,000

1,05,000

30,000

1,00,000

4,800

21,000

 

1,60,000

19,200

84,000

12,000

  6,59,000 1,25,800 2,75,200   6,59,000 1,25,800 2,75,200

 

                                                                                Balance Sheet

Liabilities Amount(Rs.) Assets Amount(Rs.)

Capital

      Ajay                                        6,59,000

      Aman                                          83,800

      Anand                                      2,75,200 

Creditors                                        1,47,000

      Less: Written off                          15,000

Bills payable

 

 

 

 

10,18,000

 

1,32,000

33,000

 

Land                                               5,40,000

   Add: Increase                                 60,000

Building                                           2,70,000

   Less: Dep                                        27,000

Plant

Bank

Stock

Debtors

 

6,00,000

 

2,43,000

1,90,000

15,000

75,000

60,000 

  11,83,000    11,83,000 

 

Working Notes :

Old Ratio                    New Ratio

   5:1:4                          1:1:1

S/R of Ajay = Old Ratio - New Ratio=`5/10-1/3=5/30=>` Sacrificing

S/R of Aman = Old Ratio - New Ratio =`1/10-1/3=-7/30=>` Gainnig

S/R of Anand = Old Ratio - New Ratio =`4/10-1/3=2/30=>`Sacrificing

Aman will compensate Ajay and Anand

Aman’s Capital A/c                                            Dr 42,000

         To Ajay’s Capital A/c                                                      30,000

         To Anand’s Capital A/c                                                    12,000

Is there an error in this question or solution?

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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: Ajay, Aman and Anand were partners in a firm sharing profits in the ratio of 5:1:4. Their Balance Sheet as on 31-3-2015 was as follows concept: Preparation of Revaluation Account and Balance Sheet. For the courses CBSE (Arts), CBSE (Commerce), CBSE (Science)
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