Question

Q.2
(5 Marks)
Sunaina and Tamanna are partners in a firm sharing profits and losses in the ratio of 3:2. Their Balance Sheet as at
31st March, 2020 stood as follows:
Balance Sheet
Liabilities
Amount ()
Assets
Amount ()
Capital Accounts:
Plant & Machinery
1,20,000
Sunaina 60,000
Land and Building
1,40,000
Tamanna 80,000
1,40,000 Debtors
1,90,000
Current Accounts:
Less: Provision for
Sunaina 10,000
Doubtful debts (40,000) 1,50,000
Tamanna 30,000
40,000 Stock
40,000
General Reserve
1,20,000 Cash
30,000
Workmen's Compensation Reserve
50,000 Goodwill
20,000
Creditors
1,50,000
5,00,000
5,00,000
They agreed to admit Pranav into partnership for 1/Sth share of profits on 1st April, 2020, on the following terms:
(a) All Debtors are good.
(b) Value of land and building to be increased to 1,80,000.
(c) Value of plant and machinery to be reduced by 20,000.
(d) The liability against Workmen's Compensation Fund is determined at "20,000 which is to be paid later in the
year.
(e) Mr. Anil, to whom 40,000 were payable (already included in above creditors), drew a bill of exchange for 3
months which was duly accepted.
(f) Pranav to bring in capital of 1,00,000 and 10,000 as premium for goodwill in cash.
Prepare Revaluation Account, Partners Capital Accounts and Balance Sheet.​

Answer 1

Answer:

Revaluation Account

Credit the increase in the value of assets or decrease in the number of liabilities to revaluation account, being profit.

Debit the decrease in value of assets or increase in the number of liabilities to revaluation account, being a loss