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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 - CBSE (Arts) Class 12 - Accountancy

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Question

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.)

Creditors

Bills Payable

General Reserve

Capitals

    R                                1,00,000

    S                                   50,000

    T                                    25,000

50,000

20,000

30,000

 

 

 

1,75,000

Land

Building

Plant

Stock

Debtors

Bank

 

50,000

50,000

1,00,000

40,000

30,000

5,000

 

  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.

Solution

                                                        Revaluation Account

Dr.                                                                                                                                      Cr.

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

To Building A/c

 

To Revaluation Profit

       R                              5,500

       S                             11,000

       T                             16,500

3,000

 

 

 

 

33,000

By Land A/c

By Creditors A/c

 

 

 

 

30,000

6,000

 

 

 

 

  36,000   36,000

 

                                                                                     Partner’s Capital Account

Dr.                                                                                                                                                                                                              Cr.

Particulars R (Rs.) S (Rs.) T (Rs.) Particulars R (Rs.) S (Rs.) T (Rs.)

To T’s Capital A/c

 

To Balance c/d

 

 

25,000

 

85,500

 

 

 

 

71,000

 

 

 

 

81,500

 

 

By Balance B/d

By Revaluation Profit

By General Reserve

By R’s Capital A/c

 

1,00,000

5,500

5,000

 

 

50,000

11,000

10,000

 

 

25,000

16,500

15,000

25,000

 

  1,10,500 71,000 81,500   1,10,500 71,000 81,500

 

                                                            Balance Sheet

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

Capital

    R                                    85,500

    S                                    71,000

    T                                    81,500

 

Creditors                             50,000

      Less : Written off             6,000

 

Bills payable

 

 

 

 

2,38,000

 

 

44,000

 

20,000

 

Land                                 50,000

      Add :Increase              30,000

Building                             50,000

       Less : Dep                    3,000

Plant

Bank

Stock

Debtors

 

 

 

80,000

 

47,000

1,00,000

5,000

40,000

30,000

 

 

  3,02,000   3,02,000

 

Working Notes

Old Ratio            New Ratio

1:2:3                    1:1:1

S/R of R = Old Ratio - New Ratio =`1/6-1/3=1/6=>` Gainning

S/R of S = Old Ratio - New Ratio =`2/6-1/3=0/6`

S/R of T = Old Ratio - New Ratio =`3/6-1/3=-1/6=>`Sacrificing

R will compensate T, since he is gaining

R’s Capital A/c                                                            Dr      25,000

         To T’s Capital A/c                                                                    25,000

  Is there an error in this question or solution?
Solution 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 Concept: Preparation of Revaluation Account and Balance Sheet.
S
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