13. Vani and Sandhya are partners sharing profits and losses in the proportion of
3/5 and 2/5. Their Balance Sheet as on 31.03.2018 was as follows:
Balance Sheet as on 31.03.2018
Liabilities
Rs
Assets
RS
Creditors
77,500 Cash at Bank
21,500
Reserve
20,000 Stock
39,000
P & L Account
5,000 Debtors 60,000
Capitals
Less: PDD 3,000 57,000
Vani
60,000 Furniture
10,000
Sandhya
30,000 Buildings
40,000
Machinery
25,000
192,500
192,500
On 01.04.2018, Chaya is admitted into partnership on the following terms:
a) She should bring 40,000 as capital for 1/4th share and goodwill of the firm
is valued at 25,000
b) Depreciate furniture by 10%.
c) Appreciate buildings by 20%.
d) PDD is increased by 3,000.
e) An amount of 2,000 due to a creditor is not likely to be claimed and hence
to be written off.
Prepare: i) Revaluation Account.
ii) Partners' Capital Accounts &
iii) New Balance Sheet of the firm
Answers
Explanation:
Journal entries
Date
Particulars
Amt.(Dr.)
Amt.(Cr.)
1.
Revaluation A/c
Dr.
29500
To Land and Building A/c
17500
To Machinery A/c
12000
(being decrease in assets)
2.
Motor cycle A/c
Dr.
20000
To Revaluation A/c
20000
(being motor cycle now recorded in books
3.
Sundry creditors A/c
Dr.
10000
To Revaluation A/c
10000
(being decrease in value of creditors)
4.
Revaluation A/c
Dr.
5000
To Cash A/c (expenses)
3000
To C’s Capital A/c
2000
(being revaluation expenses and C’s remuneration recorded)
5.
Revaluation A/c
Dr.
2500
To Provision for debtors A/c
2500
(being provision on debtors created)
6.
A’s Capital A/c
Dr.
B’s Capital A/c
Dr.
C’s Capital A/c
Dr.
To Revaluation A/c
(being transfer of loss on revaluation in old ratio)
7.
A’s Capital A/c
Dr.
2500
B’s Capital A/c
Dr.
1500
C’s Capital A/c
Dr.
1000
To Advertisement Suspense A/c
5000
(being advertisement suspense written off)
8.
B’s Capital A/c
Dr.
13000
C’s Capital A/c
Dr.
52000
To A’s Capital A/c
65,000
(being adjustment for goodwill, general reserve and investment fluctuation reserve)
Revaluation A/c
Particulars
Amount
Particulars
Amount
To Land and Buildings A/c
17500
By Motor cycle A/c
20000
To Machinery A/c
12000
By Sundry creditors A/c
10000
To Cash A/c
3000
By Partner’s Capital A/c:
7000
To C’s Capital A/c
2000
A (5/10) : 3500
To Provision for debtors A/c
2500
B (3/10) : 2100
C (2/10) : 1400
37000
37000
Workings:
1. Calculation of gain and sacrifice:
A: 1/3 -5/10 = (5/30)
B: 1/3 – 3/10 = 1/30
C: 1/3 – 2/10 = 4/30
2. Goodwill = [(50000) + 250000+ 250000] / 3
= 150000 x 2 = 300000
Answer:
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