L, M and N are partners sharing profits and losses in equal proportion. On 31st March, 2016, their balance
sheet was as follows:
Liabilities Rs Assets Rs
Creditors
Reserve and Surplus
Capital Accounts:
L 2,00,000
M 1,00,000
N 80,000
58,000
42,000
3,80,000
4,80,000
Cash
Debtors 75,000
Less: Provision for
Doubtful Debts 3,000
Stock
Fixed Assets
8,000
72,000
1,80,000
2,20,000
4,80,000
The partners decided that with effect from 1st April 2016, they will share profits and losses in the ratio of 4:2:1.
For this purpose goodwill is to be valued at 2 year’s purchase of the average profits of the last four years, which
were:
Years ending 31st March 2013 20,000(Loss)
Year ending 31st March 2014 48,000 (Profit)
Year ending 31st March 2015 60,000 (Profit)
Year ending 31st March 2016 80,000(Profit)
They further agreed that:
i) Provision for doubtful debts be increased by Rs2,000.
ii) Stock be appreciated by 20% and fixed assets be depreciated by 10%.
iii) Creditors be taken at Rs49,000.
Partners do not desire to record the revised values of assets and liabilities in the books. They also desire to leave
the reserve and surplus undistributed.
You are required to give effect to the change in profit sharing ratio by passing a single journal entry. Also
prepare the revised balance sheet.
Answers
Answered by
23
Answer:
Solved!
Explanation:
Revaluation profit is 21000
Attachments:
Similar questions