# Solution - Preparation of Revaluation Account and Balance Sheet

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#### Question

L, M and N were partners in a firm sharing profit in the ratio of 3:2:1. Their Balance Sheet on 31.3.2015 was as follows :

Balance Sheet of L,M and N as on 31-3-2015

 Liabilities Amount(Rs.) Assets Amount(Rs.) CreditorsGeneral ReserveCapitals     L                               1,20,000     M                                 80,000     N                                  40,000 1,68,00042,000   2,40,000 BankDebtorsStockInvestmentsFurnitureMachinery 34,00046,0002,20,00060,00020,00070,000 4,50,000 4,50,000

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

(i) The new profit sharing ratio between L, M, N and 0 will be 2: 2: 1: 1.

(ii) Goodwill of the firm was valued at Rs.1,80,000 and O brought his share of goodwill premium in cash.

(iii) The market value of investments was Rs.36,000.

(iv) Machinery will be reduced to Rs.58,000.

(v) A creditor of Rs.6,000 was not likely to claim the amount and hence to be written-off.

(vi) O will bring proportionate capital so as to give him 1/6th share in the profits of the firm.

Prepare Revaluation Account. Partner's Capital Accounts and the Balance Sheet of the New Firm

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P, Q and R were partners in a firm sharing profits in the ratio of 3:2:1. On 31-3-2015 their Balance Sheet was as follows :

Balance Sheet of P,Q and R as on 31-3-2015

 Liabilities Amount(Rs.) Assets Amount(Rs.) CreditorsGeneral ReserveCapitals     P                                      1,80,000     Q                                      1,20,000     R                                        60,000 2,52,00063,000   3,60,000 BankDebtorsStockInvestmentsFurnitureMachinery 51,00069,0003,30,00090,00030,0001,05,000 6,75,000 6,75,000

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

(i) The new profit sharing ratio between P, Q, R and S will be 2:2:1:1.

(ii) Goodwill of the firm was valued at Rs.2, 70,000 and S will bring his share of goodwill premium in cash.

(iii) The market value of investments was Rs.64,000.

(iv) Machinery will be reduced to Rs.87,000.

(v) A creditor of Rs.9,000 was not likely to claim the amount and hence to be written-off.

(vi) S will bring proportionate capital so as to give him 1/6th share in the profits of the firm.

Prepare Revaluation Account. Partners' Capital Accounts and the Balance Sheet of P, Q, R and S.

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Nardeep, Hardeep and Gagandeep were partners in a firm sharing profits in 2:1:3 ratio. Their Balance Sheet as on 31.3.2015 was as follows

Balance Sheet of Nardeep,Hardeep and Gagandeep as on 31-3-2015

 Liabilities AmountRs Assets AmountRs CreditorsBills PayableGeneral ReserveCapitals Nardeep            2,00,000 Hardeep            1,00,000 Gagandeep          50,000 1,00,000                    40,000                    60,000                   3,50,000 LandBuildingPlantStockDebtorsBank 1,00,0001,00,0002,00,00080,00060,00010,000 5,50,000 5,50,000

From 1-4-2015 Nardeep, Hardeep and Gagandeep decided to share the future profits equally. For this purpose it was decided that

(a) Goodwill of the firm be valued at Rs 3, 00,000.

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

(c) Creditors of Rs 12,000 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.

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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:

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

 Liabilities Amount (Rs.) Assets Amount (Rs.) CreditorsBill payableGeneral ReserveCapital:       Kushi                          3,00,000       Kumar                        2,80,000       Kavita                         3,00,000 1,20,0001,80,0001,20,000   8,80,000 CashDebtors                              2,00,000  Less: Provision                     10,000  StockFurnitureBuildingLand 70,000 1,90,0002,20,0001,20,0003,00,0004,00,000 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. Land was to be appreciated by 30% and 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.

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J, H and K 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 J,H and K as on 31-3-2015

 LIabilities Amount(Rs.) Assets Amount(Rs.) CreditorsInvestment Fluctuation FundP & L AccountCapital:       J                            1,00,000       H                             80,000       K                             40,000 42,00020,00080,000   2,20,000 Land and BuildingMotor VansInvestmentsMachineryStockDebtors                         80,000      Less:                         6,000  Cash 2,24,00040,00038,00024,00030,000 74,00032,000 3,62,000 3,62,000

On the above data H retires and J and K agreed to continue the business on the following terms:

(i) Goodwill of the firm was valued at Rs.1,02,000.

(ii) There was a claim of Rs.8,000 for workmen's compensation.

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

(iv) H will be paid Rs.14,000 in cash and the balance will be transferred in his loan account which will be paid in four equal yearly installments together with interest @ 10% p.a.

(v) The new profit sharing ratio between J and K will be 3:2 and their capitals will be in their new profit sharing ratio. The capital adjustments will be done by opening current accounts.

Prepare Revaluation Account, Partnerâ€™s Capital Accounts and Balance Sheet of the new firm.

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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.) CreditorsBills PayableGeneral ReserveCapitals      Ajay                                      5,00,000      Aman                                     1,00,000      Anand                                    1,60,000 1,47,00033,0002,10,000   7,60,000 LandBuildingPlantStockDebtorsBank 5,40,0002,70,0001,90,00075,00060,00015,000 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.

view solution
Solution for concept: Preparation of Revaluation Account and Balance Sheet. For the courses 12th CBSE (Arts), 12th CBSE (Commerce), 12th CBSE (Science)
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