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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 - Accountancy

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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

Amount

Rs

Assets

Amount

Rs

Creditors

Bills Payable

General Reserve

Capitals

      X                                    50,000

      Y                                    25,000

      Z                                   12,500  

                25,000

                10,000

                10,000

 

 

 

               87,500

Land

Building

Plant

Stock

Debtors

Bank

 

                        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.

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Solution

                                                                             Revaluation Account

Dr.                                                                                                                                                                                    Cr

Particulars

Amount

Rs

Particulars

Amount

Rs

Building A/c

Revaluation Profit

            X               2,750

            Y               5,500

            Z               8,250      

                            1,500

 

 

 

           16500 

Land A/c

Creditors A/c

 

 

 

                   15,000

                     3,000

 

 

 

                             18,000                        18,000
   

 

                                                                                      Partner’s Capital Account

Dr.                                                                                                                                                                                                        Cr.

Particulars

X

Rs

Y

Rs

Z

Rs

Particulars

X

Rs

Y

Rs

Z

Rs

Z’s Capital A/c

 

 

Balance c/d

 

12,500

 

 

42,750

 

 

 

 

35,500

 

 

 

 

40,750

 

Balance b/d

R/V Profit

General

Reserve

X’s Capital A/c

50,000

2,750

 

2,500

 

25,000

5,500

 

5,000

 

12,500

8,250

 

7,500

12,500

  55,250 35,500 40,750   55,250 35,500 40,750
           

 

                                                                                 Balance Sheet as on 31 March 2015

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital

        X                                    42,750

        Y                                    35,500

        Z                                    40,750

 

Creditors                               25,000

     Less : Written off                3,000

 

Bills payable

 

 

 

 

 

 

 

1,19,000

 

 

22,000

 

10,000

 

 

Land                                  25,000

       Add :Increase             15,000

Building                              25,000

       Less : Dep                     1,500

 

Plant

Bank

Stock

Debtors

 

 

 

 

 

40,000

 

23,500

 

50,000

2,500

20,000

15,000

1,51,000

 

1,51,000

 

 

Working Notes

Old Ratio                        New Ratio
 1:2:3                                  1:1:1

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

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

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

X will compensate Z, since he is gaining

X’s Capital A/c                          Dr                   12,500

         To Z’s Capital A/c                                                  12,500

Concept: Preparation of Revaluation Account and Balance Sheet
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