Read the following hypothetical text and answer the given questions: | ||||||||||||||||||
Raj, Taj and Naz are partners engaged in the business of selling frozen food items sharing profits and losses equally. | ||||||||||||||||||
As there was need of funds to purchase more refrigerators, Raj bought additional capital of? 1,50,000 in the firm. Raj demanded that his share in profit should be increased as he bought additional capital to which rest of the partners agreed From 1st April, 2019, they decided to share profits in the ratio of 2 : 1 : 1, At the time of reconstitution, the following assets and liabilities are revalued and reassessed: | ||||||||||||||||||
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Profit on revaluation will be: |
A) Rs. 7,500
B) Rs. 92,500
C) Rs. 17,500
D) Rs. 18,500
Correct Answer: C
Solution :
[c] Rs. 17,500 |
Hint: Net Effect of Revaluation: |
Profit due to increase in the value of (Rs.) |
freehold premises = 50,000 |
Profit due to decrease in the value of creditors = 5,000 |
Loss due to fall in the value of stock, debtors and furniture = (37,500) |
Profit on revaluation 17,500 |
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