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Ashok, Bhim and Chetan were partners in a firm sharing profits in the ratio of 3:2:1. Their Balance Sheet as on 31-3-2015 was as follows - CBSE (Arts) Class 12 - Accountancy

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Question

Ashok, Bhim and Chetan were partners in a firm sharing profits in the ratio of 3:2:1.

Their Balance Sheet as on 31-3-2015 was as follows:

                                      Balance Sheet of Ashok, Bhim and Chetan

                                                         as on 31-3-2015

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

Creditors

Bills Payable

General Reserve

Capitals

        Ashok                2,00,000

        Bhim                  1,00,000

        Chetan                  50,000

1,00,000

40,000

60,000

 

 

 

3,50,000

Land

Building

Plant

Stock

Debtors

Bank

 

1,00,000

1,00,000

2,00,000

80,000

60,000

10,000

 

  5,50,000   5,50,000

 

Ashok, Bhim and Chetan decided to share the future profits equally, w.e.f. April 1, 2015. For this it was agreed that:

(i) Goodwill of the firm be valued at 3,00,000

(ii) Land be revalued at 1, 60,000 and building be depreciated by 6%.

(iii) Creditors of 12,000 were not likely to be claimed and hence be written off

Prepare Revaluation Account Partners’ Capital Accounts and Balance Sheet of the reconstituted firm

Solution

                                                                      Revaluation Account

Dr.                                                                                                                                                         Cr.

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

To Building A/c

 

To Revaluation (Profit)

        Ashok                              33,000

        Bhim                                22,000

        Chetan                              11,000

6,000

 

 

 

 

66,000

By Land A/c

By Creditors A/c

 

 

 

 

60,000

12,000

 

 

 

 

  72,000   72,000

 

Partner’s Capital Account

Dr.                                                                                                                                                                                                                  Cr.

Particulars Ashok (Rs.) Bhim (Rs.) Chetan (Rs.) Particulars Ashok (Rs.) Bhim (Rs.) Chetan (Rs.)

By Ashok’s Capital A/c

 

 

By Balance c/d

 

 

 

 

3,13,000

 

 

 

 

1,42,000

 

50,000

 

 

21,000

 

To Balance b/d

To R/V Profit

To General Reserve

To Chetan’s Capital A/c

 

2,00,000

33,000

30,000

50,000

 

1,00,000

22,000

20,000

 

 

50,000

11,000

10,000

 

 

  3,13,000 1,42,000 71,000   3,13,000 1,42,000 71,000

 

                                                                             Balance Sheet

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

Capital

      Ashok                         3,13,000

      Bhim                          1,42,000

      Chetan                          21,000

                                      --------------

Creditors                          1,00,000

     Less : Written off            12,000

                                      --------------

Bills Payable

 

 

 

 

66,000

 

 

88,000 

 

40,000

 

                         

  Land                     1,00,000

        Add :Increase   60,000

Building                1,00,000

     Less : Dep.          6,000

 

Plant

Bank

Stock

Debtors

 

 

1,60,000

 

94,000

 

2,00,000

10,000

80,000

60,000

  6,04,000   6,04,000

 

Working Notes

Old Ratio                     New Ratio

 3 : 2 : 1                         1:1:1

S/R of Ashok=old Ration - New Ration=`3/6-1/3=1/6=>`Sacrificing

S/R of Bhim=old Ration - New Ration=`2/6-1/3=0/6=>`Sacrificing

S/R of Chetan=old Ration - New Ration=`1/6-1/3=1/6=>` Gaining

 

Ashok will be compensated by Chetan.

Chetan’s Capital A/c                                                             Dr           50,000

         To Ashok’s Capital A/c                                                                           50,000

  Is there an error in this question or solution?
Solution Ashok, Bhim and Chetan were partners in a firm sharing profits in the ratio of 3:2:1. Their Balance Sheet as on 31-3-2015 was as follows Concept: Preparation of Revaluation Account and Balance Sheet.
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