Question

37B. A and B are equal partners. Their Balance Sheet as on 31st December, 2018 is as follows:
Liabilities
Amount
Assets
Amount
Creditors
Reserve
Capitals :
A
B
20,000 Cash
10,000 Sundry Debtors
Stock
Furniture
45,000 Land/Building
75,000
5,000
20,000
15,000
10,000
25,000
75,000
25,000
20,000
C is admitted into firm for 1/4th share in future profit on the following terms:
(a) C brings 20,000 as capital but he is unable to bring his share of goodwill 4,000 in cash. No
Goodwill Account is raised.
(b) Furniture is depreciated by 10% and 5% Reserve for bad debts is created,
(c) Land and building is appreciated by 20%.
Prepare Revaluation A/c, Partners' Capital A/cs and the opening Balance Sheet after
admission of C.
[Ans. Revaluation A/c Profit 3,000, Partners' Capital A/cs Balances : A33,500; B2 28,500;
C16,000, Balance Sheet Total 98,000.)​

Answer 1

Answer:

(i)                                              REVALUATION A/C

Dr.                                                                                                                    Cr.  

Particulars Amount  Particulars  Amount  

To Provision for Doubtful Debts 1700 By Prepaid advertisement Expenses   1200

To A's Capital  

(revenue expense) 2100  By B's Capital  

(personal expenses) 2000  

   By Loss transferred to:

- A's Capital a/c

- B's Capital a/c

- C's Capital a/c  

300

200

100  

  3800

(ii)                                    PARTNER'S CAPITAL A/C

Dr.                                                                                                                      Cr.

Particulars A  B  C  D  Particulars  A  B  C  D  

To Revaluation a/c

(personal)   2000      By Balance b/d 60000  40000  40000    

To Revaluation a/c

(loss) 300  200  100    By Cash a/c       40000  

To Balance c/d 61800  37800  39900  50000  By Creditors       10000  

         By revaluation expenses 2100        

 62100  40000  40000  50000    62100  40000  40000  50000  

(iii)                                    BALANCE SHEET

Dr.                                                                                                                     Cr.

Liabilities Amount  Assets  Amount  

Capital a/cs:

- A

- B

- C

- D  

61800

57800

39900

50000  Land and Building 50000  

Bills Payable 10000  Plant and Machinery 40000  

Creditors                 30000

(-) D's Capital           (10000)  20000 Furniture 30000  

   Stock 20000  

   Prepaid Advertisement

Expenses 1200  

   Debtors                         30000

(-) Provision for              (1700)

Doubtful debts

(+) Bills receivable          4000

dishonoured  32300

   Bills receivable 20000  

   Bank (10000+40000-4000) 46000

 239500   239500