On 31st March, 1996 the Sheet of M/s P, R and S sharing profit and Losses in the ratio of 6: 5: 3, stood as
follows:
Liabilities Rs. Assets Rs.
Sundry Creditors 37,800 Cash 3,660
Bills Payable 12,600 Sundry Debtors 58,920.
General Reserve 21,000 Stock 52,920
Capital Accounts Furniture 14,700
P 70,800 Land & Building 90,300
R 29,100 Goodwill 10,500
S 59,700
2,31,000
They agree to admit Q into partnership giving him 1/8th Share, on 1.4.1996 on the following terms:
1- Furniture be depreciated by Rs. 1,840.
2- Stock shall be valued 10% less than the balance sheet. Value
3- A provision of Rs. 2,640 be made, for outstanding repair bill.
4- The value of land and buildings having appreciated be brought up – to Rs. 1,19,700.
5- Value of good will be brought up – to Rs. 28,140.
6- Q should bring in cash Rs. 29,400 as his capital.
After making the above adjustments the capital accounts of the old partners be adjusted on the basis of
proportion of Q’s Capital to his share in the business by bringing in or taking out cash.
You are required to prepare Revaluation Account, Capital Accounts of Partners and Balance Sheet as on
1.4.1996 after Q’s admission.
answer quickly urgent
Answers
Explanation:
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Profit from Revaluation is Rs. 19040.
GIVEN: Profit Sharing Ratio of three partners along with their balance sheet
TO FIND Revaluation Account.
SOLUTION:
According to the question,
Profit sharing Ratio of three partners = 6:5:3
And, the Fourth partner that is Q is admitted for 1/8th share.
Therefore, The Sacrificing Ratio = 1 - 1/8
= 7/8
Now,
The Revaluation Account will be as follows:
REVALUATION ACCOUNT
Particulars Amount Particulars Amount
To Furniture 1840 By Land & Building 29400
To Depreciation 5880
To O/S Repair Bill 2640
To Revaluation Profit
P 8160
S 6800
R 4080 19040
29400 29400
- Further, this profit shall be transferred to the Partner's Capital Account along with the goodwill of each partner and drawings if any.
- All the revalued assets, liabilities and capital shall be recorded in the new Balance Sheet.
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