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Question
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
