Question

Varsha, Shanthi and Madhuri are partners, sharing profits in the ratio of 5:4:3. Their balance sheet as on 31st December 2017 is as under:

Balance Sheet as on 31.12.2018

Liabilities		₹	Assets	₹
Capital accounts:			Premises	1,20,000
Varsha	80,000	1,60,000	Stock	40,000
Shanthi	60,000		Debtors	50,000
Madhuri	20,000		Cash at bank	18,000
General reserve		48,000	Profit and loss A/c (loss)	12,000
Sundry creditors		32,000
		2,40,000		2,40,000

On 1.1.2018, Madhuri died and on her death the following arrangements are made:

1. Stock to be depreciated by ₹ 5,000
2. Premises is to be appreciated by 20%
3. To provide ₹ 4,000 for bad debts
4. The final amount due to Madhuri was not paid.

Prepare revaluation account, partners’ capital account and the balance sheet of the firm after death.

Answer 1

Dr.	Revaluation A/c			Cr.
Particulars		Rs	Particulars	Rs
To Stock		5,000	By Premises	24,000
To Bad debts		4,000
To Varsha Capital A/c	8,000	15,000
To Shanthi Capital A/c	5,000
To Mdhuri's Capital A/c	3,750
		24,000		24,000

 

Dr.	Capital Account						Cr.
Particulars	Varsha ₹	Shanthi ₹	Madhuri ₹	Particulars	Varsha ₹	Shanthi ₹	Madhuri ₹
To Profit and loss A/c	5,000	4,000	3,000	By Balance b/d	80,000	60,000	20,000
To Balance c/d	1,01,250	77,000	-	By General Reserve	20,000	16,000	12,000
To Executors A/c	-	-	32,750	By Revaluation Profit	6,250	5,000	3,750
	1,06,250	81,000	35,750		1,06,250	81,000	35,750

 

Balance Sheet as on 31.12.2017
Liabilities		Rs	Assets	Rs	Rs
Creditors		32,000	Premises	1,20,000	1,44,000
Madhuri Executor Account		32,750	Add: Appreciation	24,000
Capital A/c			Cash		18,000
Varsha	1,01,250	1,78,250	Debtors	50,000	46,000
Shanthi	77,000		Less: Bad debts	4,000
			Stock	40,000	35,000
			Less: Depreciation	5,000
					8,200
		2,43,000			2,43,000