Question

Arun and Vijay are partners in a firm sharing profits and losses in the ratio of 5:1.

Balance Sheet (Extract)mahine 40000

If value of machinery in the balance sheet is undervalued by 20%, then at what value will machinery be shown in

new balance sheet:

(a) ` 44,000 (b) `48,000 (c) `32,000 (d) `50,000​

Answer 1

Answer:

If machinery is undervalued by 20% it means it's value in books is 80% so 100% value is

40000/80*100=50000 shown in closing balance sheet

Explanation:

option D is correct

Answer 2

Option (B) 48,000

Explanation:

Old Amount of machinery = 40,000

It is clearly mentioned in the question that

This Old Amount is Undervalued by 20% ( This Means that The amount 40,000 is Shown less on the old Balance sheet by 20%)

Therefore, we should Add the Undervalued Amount of machinery in the new balance sheet

Old value of Machinery= 40,000

Add Undervalued Amount = 8,000

Amount of machinery shown on the new balance sheet = 48,000

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