Question

(Accountancy)
1. Pawan and Atul are partners in a business. They admitted Karan on 1st Jul 2019. The assets were
revalued and liabilities were reassessed. Assets and liabilities were accordingly shown at their revised
values.
(5)
Book value
Revised value
Building
5 lac
6 lac
Computer
2 lac
1.5 lac
S.creditors
4 lac
4.25 lac
Do you think that any accounting concept/principle is violated in giving effect to each of the above
asset/liability?
mehrin business Debe Ratef not​

Answer 1

Answer:

(i) JOURNAL

1. Cash a/c... Dr. 160000

To C's Capital a/c 100000

To Premium for Goodwill a/c 60000

(Being capital and premium for goodwill brought in by C)

2. Premium for Goodwill a/c... Dr. 60000

To A's Capital a/c 40000

To B's Capital a/c 20000

(Being premium for goodwill distributed among the partners in the ratio of 2:1)

3. Revaluation a/c.... Dr. 8000

To Stock a/c 4000

To Provision for doubtful debts a/c 3000

To Creditors a/c 1000

(Being decrease in assets and increase in liabilities transferred to revaluation account)

4. Plant a/c.... Dr. 20000

Building a/c... Dr. 15000

To Revaluation a/c 35000

(Being increase in assets transferred to revaluation account)

5. Revaluation a/c... Dr. 27000

To A's Capital a/c 18000

To B's Capital a/c 9000

(Being profit on revaluation transferred to the partner's capital account)

(ii) REVALUATION A/C

Dr. Cr.

Particulars Amount

(in Rs.) Particulars Amount

(in Rs.)

To Stock a/c 4000 By Plant a/c 20000

To Provision for

doubtful debts a/c 3000 By Building a/c 15000

To Creditors a/c 1000

To Profit on Revaluation

- A's Capital a/c

- B's Capital a/c

18000

9000

TOTAL 35000 TOTAL 35000

(iii) PARTNER'S CAPITAL A/C

Dr. Cr.

Particulars A B C Particulars A B C

By Balance b/d 180000 150000

By Cash a/c 100000

By Premium for Goodwill a/c 40000 20000

To Balance c/d 238000 179000 100000 By Profit on revaluation a/c 18000 9000

TOTAL 238000 179000 100000 TOTAL 238000 179000 100000

(iv) BALANCE SHEET

(After admission of C)

Liabilities Amount

(in Rs.) Assets Amount

(in Rs.)

Bills Payable 10000 Cash in Hand (10000+160000) 170000

Creditors (58000+1000) 59000 Cash at Bank 40000

Outstanding Expenses 2000 Sundry Debtors (60000-3000) 57000

Capital

- A

- B

- C

238000

179000

100000 Stock (40000-4000) 36000

Plant (100000+20000) 120000

Building (150000+15000) 165000

TOTAL 588000 TOTAL 588000