Question

and B are partners sharing profits in the ratio of 3:2. On 1st April, 2019, their Balance Sheet

was as follows:

Liabilities ₹ Assets ₹

Sundry Creditors 51,000 Goodwill 15,000

Workmen Compensation

Fund

4,000 Plant 75,000

Capitals:

A: 1,10,000

B: 1,20,000 2,20,000

Patent 8,000

Stock 80,000

Debtors 62,000

cash 20,000

Profit and Loss A/c 15,000

275,000 2,75,000

On this date they admitted C on the following terms:

i) C will get 3/10th share in profits which he acquires 1/5th from A and 1/10 from B,

he will bring in ₹20,000 as his capital.

ii) Goodwill of the firm be valued at ₹40,000.

iii) Plant is valued at ₹60,000 and Stock 70,000

iv) Claim over workmen compensation is ₹6,000

v) Patents should be written off.

vi) Investments of Rs.5,000 which did not appear in books of account should be duly

recorded.

vii) B is to withdraw ₹20,000 in cash for persona use.

Prepare Revaluation​

Answer 1

Answer:

Please mark me in brain list

Explanation:

(i) JOURNAL

1. Cash a/c... Dr. 10500

To C's Capital a/c 7500

To Premium for goodwill a/c 3000

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

2. Premium for goodwill a/c... Dr. 3000

To A's Capital a/c 2000

To B's Capital a/c 1000

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

3. Building a/c... Dr. 2500

To Revaluation a/c 2500

(Being increase in asset transferred to revaluation account)

4. Revaluation a/c.... Dr. 1750

To Plant and Machinery a/c 875

To Stock a/c 500

To Provision for doubtful debts a/c 375

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

5. Revaluation a/c... Dr. 750

To A's Capital a/c 500

To B's Capital a/c 250

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

(ii) REVALUATION A/C

Dr. Cr.

Particulars Amount

(in Rs.) Particulars Amount

(in Rs.)

To Stock a/c 500 By Building a/c 2500

To Plant and Machinery a/c 875

To Provision for doubtful debts a/c 375

To Profit transferred to

- A's Capital a/c

- B's Capital a/c

500

250

TOTAL 2500 TOTAL 2500

(iii) PARTNER'S CAPITAL A/C

Particulars A B C Particulars A B C

By Balance b/d 15000 10000 -

By Cash a/c - - 7500

To Balance c/d 17500 11250 7500 By Premium for goodwill a/c 2000 1000 -

By Revaluation a/c 500 250 -

(iv) BALANCE SHEET

(after admission of C)

Liabilities Amount

(in Rs.) Assets Amount

(in Rs.)

Building (25000+2500) 27500

Capital

- A

- B

- C

17500

11250

7500 Plant and Machinery (17500-875) 16625

Sundry Creditors 32950 Stock (10000-500) 9500

Debtors 4850

-- Provision for Doubtful debts (375) 4475

Cash (600+10500) 11100

TOTAL 69200 TOTAL 69200