# Solution - Preparation of Revaluation Account and Balance Sheet

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#### Question

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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R, S and T were partners in a firm sharing profit in the ratio of 1:2:3. 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.) CreditorsBills PayableGeneral ReserveCapitals    R                                1,00,000    S                                   50,000    T                                    25,000 50,00020,00030,000   1,75,000 LandBuildingPlantStockDebtorsBank 50,00050,0001,00,00040,00030,0005,000 2,75,000 2,75,000

R,S and T decided to share the profits equally with effects from 1.4.2015. For this it was agreed that:

(a) Goodwill of the firm will be valued at Rs.1,50,000

(b) Land will be revalued at Rs.80,000 and building be depreciated by 6%.

(c) Creditors of Rs.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.

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Mohan and Mahesh were partners in a firm sharing profit in the ratio 3:2. On 1st April, 2012 they admitted Nusrat as a partners in the firm. The Balance Sheet of Mohan and Mahesh on that date was as under:

Balance Sheet of Mohan and Mahesh as on 1st April, 2012

 Liabilities Amount(Rs.) Assets Amount(Rs.) CreditorsWorkman’s Compensation FundGeneral ReserveCapital:       Mohan                     1,00,000       Mahesh                       80,000 2,10,0002,50,0001,60,000  1,80,000 Cash in handDebtorsStockMachineryBuilding 1,40,0001,60,0001,20,0001,00,0002,80,000 8,00,000 8,00,000

It was agreed that:

i. The value of Building and Stock be appreciated to Rs.3,80,000 and Rs.1,60,000 respectively.

ii. The liabilities of workmen's compensation fund was determined at Rs.2,30,000.

iii. Nusrat brought in her share of goodwill Rs.1,00,000 in cash.

iv. Nusrat was to bring further cash as would make her capital equal to 20% of the combined capital of Mohan and Mahesh after above revaluation and adjustments are carried out.

v. The future profit sharing ratio will be Mohan 2/5, Mahesh 2/5, Nusrat 1/5.

Prepare Revaluation Account, Partner's Capital Accounts and Balance Sheet of the new firm. Also show clearly the calculation of Capital brough by Nusrat.

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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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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.) CreditorsInvestment Fluctuation FundP & L AccountCapitals     A                                                       1,50,000     B                                                       1,20,000     C                                                          60,000 63,00030,0001,20,000   3,30,000 Land & BuildingMotor VansInvestmentsMachineryStockDebtors                                                     1,20,000       Less : Provision                                       9,000Cash 1,86,00060,00057,00036,00045,000 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.

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

Balance Sheet of X,Y and Z as on 31-3-2015

 Liabilities AmountRs Assets AmountRs CreditorsBills PayableGeneral ReserveCapitals      X                                    50,000      Y                                    25,000      Z                                   12,500 25,000                10,000                10,000                  87,500 LandBuildingPlantStockDebtorsBank 25,000                        25,000                        50,000                        20,000                        15,000                          2,500 1,37,500 1,37,500

X, Y and Z decided to Share the profits equally with effect from 1-4-2015. For this It was agreed that

(i) Goodwill of the firm will be valued at 75,000

(ii) Land will be revalued at 40,000 and building be depreciated by 6%.

(iii) Creditors of 3,000 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.

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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