Question

Part-1 (Section-A) 1. X, Y and Z are partners sharing profits in the ratio of 3:2:1. They admit Mas a new partner. Following information is available on the Admission of M: Creditors 84,000 Machinery 66,000 Stock 30,000 Machinery was overvalued by 10% and creditors were found only Rs.81,000. Stockwas also overvalued. Loss on Revaluation Debited to Z's Capital Account Rs.1,500. (a) 10% (b) 15% (c) 20% (0) 25percent
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Answer 1

Answer:

25%

Explanation:

Answer 2

Given:

X, Y and Z are partners sharing profits in the ratio of 3:2:1. They admit Mas is a new partner. The following information is available on the Admission of M: Creditors 84,000 Machinery 66,000 Stock 30,000 Machinery was overvalued by 10% and creditors were found only Rs.81,000. The stock was also overvalued. Loss on Revaluation Debited to Z's Capital Account Rs.1,500.

To Find:

Percentage by which the stock is undervalued/overvalued

(a) 10% (b) 15% (c) 20% (d) 25%

Solution:

Working note 1:

The value of machinery in the books is 66000, this amount has been overvalued by 10% which means that 66000 represents 110%.

So the value of machinery will be,

[tex]value=\frac{66000}{0.11}\\ =60000[/tex]

So overvaluation amount is (66000-60000)=6000

​Working note 2:

The amount of creditors as per book is 84000

The original amount of creditors is 81000

so the amount of creditors is overvalued by 3000

Working note 3:

loss on revaluation debited to Z's capital account is 1500

Z's share in the firm is 1/6

so total loss on revaluation is 1500*(6/1) that is 9000

Working note 4:

Balancing figure of 6000 shall be treated as undervaluation of the stock

value of stock in the books is 30000

undervaluation amount is 6000

percentage of undervaluation will be,

[tex]percentage=\frac{6000}{30000}*100\\ =20\%[/tex]

Hence, the correct option is (c)20%.