Question

6
A, B and C sharing profits and losses in the ratio of 2:2:1. They decide to share profits pane
losses equally with effect from 1st April, 2020. Following is the extract of their Balance Shea
as on 31st March 2020
Liabilities
Amount (Rs.)
Amount (Rs.)
Investment
Fluctuation Reserve 50000
Investment (at cost)
Assets
200000
Show the accounting treatment (Journal entry) under the following cases
Case (i) if the market value of the investment is Rs.200000
Case (ii) if the market value of the investment is Rs. 180000
Case (iii) if the market value of the investment is Rs.130000
Case (iv) if the market value of the investment is Rs.275000
OR
X, Y and Z are partners. their capitals being Rs.300000, Rs. 250000 and Rs 2000
respectively. In arriving at these figures, the profits for the year ended 315 March 20
Rs.240000 has already been credited to the partners in the proportion in which they sha
profits. Their drawings were X Rs.50000, Y Rs40000 and Z Rs.30000 for the year endi
31st march, 2020. Subsequently the following omissions were noticed and it was decided
bring them into account.
(i) Interest on capital @10% p.a.
(ii) Interest on drawings X Rs.2500, Y Rs 2000 and Z Rs. 1500
Make the necessary journal entry​

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 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