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# Kushal Kumar and Kavita Were Partners in a Firm Sharing Profit in the Ratio 3:1:1. on 1st April 2012 Their Balance Sheet Was as Follows: Prepare Revaluation Account, Partners Capital Accounts and Balance Sheet of Kushal and Kumar After Kavita'S Retirement. - CBSE (Arts) Class 12 - Accountancy

ConceptPreparation of Revaluation Account and Balance Sheet

#### Question

Kushal Kumar and Kavita were partners in a firm sharing profit in the ratio 3:1:1. On 1st April 2012 their Balance Sheet was as follows:

Balance Sheet of Kushal, Kumar and Kavita as on 1st April 2012

 Liabilities Amount (Rs.) Assets Amount (Rs.) Creditors Bill payable General Reserve Capital:        Kushi       3,00,000        Kumar     2,80,000        Kavita     3,00,000 1,20,000 1,80,000 1,20,000       8,80,000 Cash Debtors               2,00,000   Less: Provision    10,000   Stock Furniture Building Land 70,000   1,90,000 2,20,000 1,20,000 3,00,000 4,00,000 13,00,000 13,00,000

On the above date, Kavita retired and the following was agreed:

i. Goodwill of the firm was valued at Rs.40,000.

ii. The land was to be appreciated by 30% and the building was to be depreciated by Rs.1,00,000.

iii. Value of furniture was to be reduced by Rs.20,000.

iv. Bad debts reserve is to be increased to Rs.15,000.

v. 10% of the amount payable to Kavita was paid in cash and the balance was transferred to her Loan Account.

vi. Capitals of Kushal and Kumar will be in proportion to their new profit sharing ratio. The surplus/deficit, if any in their Capital Accounts will be adjusted through Current Accounts.

Prepare Revaluation Account, Partners Capital Accounts and Balance Sheet of Kushal and Kumar after Kavita's retirement.

#### Solution

 Revaluation Account Particulars Amount(Rs.) Particulars Amount(Rs.) To Building A/c To Furniture A/c To Provision for bad-debts 1,00,000 20,000 5,000 By Land By Revaluation A/c      Kushal           3,000      Kumar           1,000      Kavita           1,000 1,20,000       5,000 1,25,000 1,25,000

 Partners’ Capital Account Particulars Kushal Kumar Kavita Particulars Kushal Kumar Kavita To Kavita’s Capital A/c To Revaluation loss A/c To Kumar Current A/c To Cash A/c To Kavita’s Loan A/c   To Balance c/d 6,000 3,000         4,98,000 2,000 1,000 1,35,000       1,66,000 1,000   33,100 2,97,900 By Balance b/d By General Reserve A/c By Kushal’s Capital A/c By Kumar’s Capital A/c By Kushal’s Capital A/c 3,00,000 72,000     1,35,000 2,80,000 24,000 3,00,000 24,000 6,000 2,000 5,07,000 3,04,000 3,32,000 5,07,000 3,04,000 3,32,000

 Balance SheetAs on April 01, 2012 after Kavita’s retirement Liabilities Amount (Rs.) Assets Amount (Rs.) Kushal’s Capital A/c Kumar’s Capital A/c Bill payable Creditors Kavita’s Loan A/c Kushal’s Current A/c 4,98,000 1,66,000 1,80,000 1,20,000 2,97,900 1,35,000 Land Building Furniture Stock Cash A/c (70,000–33,100) Debtors                      2,00,000     Less :Provision           15,000   Kumar’s Current A/c 5,20,000 2,00,000 1,00,000 2,20,000 36,900   1,85,000 1,35,000 13,96,900 13,96,900

Working Note:

Total Capital of Kushal = 3,72,000 – 3,000 = 3,69,000

Total Capital of Kumar = 3,04,000 – 1,000 =3,03,000

Total Capital of new firm = 3,69,000 + 3,03,000 = 6,72,000

The new capital has to be in the new profit sharing ratio = 3:1

Therefore, Kushal's new capital =672000xx3/4=504000

Kumar's new Capital =6,72,000xx1/4=168000

Is there an error in this question or solution?

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Solution Kushal Kumar and Kavita Were Partners in a Firm Sharing Profit in the Ratio 3:1:1. on 1st April 2012 Their Balance Sheet Was as Follows: Prepare Revaluation Account, Partners Capital Accounts and Balance Sheet of Kushal and Kumar After Kavita'S Retirement. Concept: Preparation of Revaluation Account and Balance Sheet.
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