Sachin and Ramesh share profits and losses in the ratio of 3:2 in partnership firm. Their balance sheet as on 31" March, 2018 was as follows:
Balance Sheet as on 31 March, 2018
Amount
50,000
Assets
| Cash in hand 40,000 Bills Receivable
64,000
10,000
60,000 48,000
2,72,000
Debtors
Stock
Furniture
Machinery
Building
Liabilities
Amount
(2)
10,000 15.200
80.000
48,000
18.800
40,000
60,000
2.72.000
Creditors
Bills Payable
Bank Loan
General Reserve
Capital Account: Sachin
Ramesh
On 01" April. 2018, they admitted Virat on the following terms:
a) For 1/5 share in future profits. Virat should bring 40,000 for his capital a 20.000 for goodwill in cash.
b) The stock is to be depreciated by 10 % and machinery by 5%.
c) Furniture should be appreciated upto 7 21,000 and building be appreciated by 20%. Prepare Revaluation Account, Partner's Capital Accounts and Balance Sheet of the new firm.
Answers
Answer:
see below
Explanation:
(i) REVALUATION A/C
Dr. Cr.
Particulars Amount Particulars Amount
To Provision for Doubtful Debts 1700 By Prepaid advertisement Expenses 1200
To A's Capital
(revenue expense) 2100 By B's Capital
(personal expenses) 2000
By Loss transferred to:
- A's Capital a/c
- B's Capital a/c
- C's Capital a/c
300
200
100
3800 3800
(ii) PARTNER'S CAPITAL A/C
Dr. Cr.
Particulars A B C D Particulars A B C D
To Revaluation a/c
(personal) 2000 By Balance b/d 60000 40000 40000
To Revaluation a/c
(loss) 300 200 100 By Cash a/c 40000
To Balance c/d 61800 37800 39900 50000 By Creditors 10000
By revaluation expenses 2100
62100 40000 40000 50000 62100 40000 40000 50000
(iii) BALANCE SHEET
Dr. Cr.
Liabilities Amount Assets Amount
Capital a/cs:
- A
- B
- C
- D
61800
57800
39900
50000 Land and Building 50000
Bills Payable 10000 Plant and Machinery 40000
Creditors 30000
(-) D's Capital (10000) 20000 Furniture 30000
Stock 20000
Prepaid Advertisement
Expenses 1200
Debtors 30000
(-) Provision for (1700)
Doubtful debts
(+) Bills receivable 4000
dishonoured 32300
Bills receivable 20000
Bank (10000+40000-4000) 46000
239500 239500