Question

16 Chander and Damini were partners in a firm sharing profits and losses equally. On 31 March, 2017
their Balance Sheet was as follows:
BALANCE SHEET OF CHANDER AND DAMINI
as on 31st March, 2017
Uabilities
Assets
Sundry Creditors
1,04,000 Cash at Bank
30,000
Capitals:
Bills Receivable
45,000
Chander
2.50.000
Debtors
75,000
Damini
2.16.000 4,66,000 Furniture
1,10,000
Land and Building
3,10,000
5,70,000
5,70,000
On 1st April 2017, they admitted Elina as a new partner for 1/3rd share in the profits on the following
conditions:
() Elina will bring 83,00,000 as her capital and 850,000 as her share of goodwill premium, half of which
will be withdrawn by Chander and Damini.
(11) Debtors to the extent of 5,000 were unrecorded.
(18) Furniture will be reduced by 10% and 5% provision for bad and doubtful debts will be created on
bills receivables and debtors.
(iv) Value of Land and Building will be appreciated by 20%.
( There being a daim against the firm for damages, a liability to the extent of 8,000 will be created for
the same.
Prepare Revaluation Account and Partners' Capital Accounts.​

Answer 1

Revaluation Account and Partners' Capital Accounts

Explanation:

Revaluation of assets and reassessment of liabilities are recorded in an account named Revaluation Account or Profit and Loss Adjustment Account. Increase in the amount of assets and decrease in the amount of liability is recorded in the credit side of this account while decrease in the value of assets and increase in the value of liabilities is recorded in the debit side of this account.

Partners Capital Account is an equity account in the accounting records of a partnership. A separate capital account is to be maintained for each partner and the capital contributed by each of them is credited to this account.

The capital account of partners can be maintained in any of the following two ways:

• Fixed Capital Account

• Fluctuating Capital Account