Question

X and Y are partners sharing profits and losses equally. Their Balance Sheet as on 31st March, 2018 is given below:
Z is admitted as a new partner for 1/4th share under the following terms:
(a) Z is to introduce ₹ 1,25,000 as capital.
(b) Goodwill of the firm was valued at nil.
(c) It is found that the creditors included a sum of ₹ 7,500 which was not to be paid. But it was also found that there was a liability for compensation to Workmen amounting to ₹ 10,000.
(d) Provision for Doubtful Debts is to be created @ 10% on debtors.
(e) In regard to the Partners Capital Accounts present fixed capital method is to be converted into fluctuating capital method.
(f) Bills of ₹ 20,000 accepted from creditors were not recorded in the books.
(g) X provides ₹ 50,000 loan to the business carrying interest @ 10% p.a.
You are required to prepare Revaluation Account, Partners Capital Accounts, Bank Account and the Balance Sheet of the new firm.

Answer 1

The Revaluation Account, Partners Capital Accounts, Bank Account and the Balance Sheet of the new firm are calculated below:

Explanation:

Given,

X and Y are partners sharing profits and losses equally.

Z is admitted for 1/4th share

Z's capital will be Rs. 1,25,000

As per the Revaluation account, an amount of Rs. 12500 debited from the X and Y's current Account and the Creditors Account of Rs. 2500, Rs. 2500 and Rs. 7500 respectively are credited to the Reserve for D. debts accounts and liability for WCF account of an amount of Rs. 2500 and Rs. 10000 respectively.

An amount of Rs. 40000 and Rs. 30000 from the X and Y's current account has been transferred to the Revaluation and the balance account.