question_answer

A, B and C are partners with 2 : 2 : 1 ratio. The following is their balance sheet: Balance Sheet as at ...

Liabilities		Amt (Rs.)	Assets	Amt (Rs.)
Creditors		1,00,000	Bank	40,000
Bills Payable		70,000	Debtors	60,000
General Reserve		30,000	Building	2,00,000
Profit and Loss		20,000	Machinery	80,000
Capital A/cs			Patents	20,000
A	1,00,000		Goodwill	20,000
B	60,000
C	40,000	2,00,000
		4,20,000		4,20,000

Adjustments (i) C takes retirement. (ii) Goodwill of the firm is valued at Rs. 60,000. (iii) Building undervalued by Rs. 20,000. (iv) A debtor of Rs. 10,000 became insolvent and nothing is receivable from him. (v) Provision for outstanding repair bills Rs. 5,000. (vi) Rs. 10,000 unrecorded creditors brought into account. (vii) A and B decide to pay off C by taking necessary bank overdraft. Prepare revaluation account, partners' capital accounts, bank account and balance sheet. A and B were partners in a firm sharing profits in the ratio 3 : 1. They admitted C as a new partner for \[\frac{3}{8}th\] share in the profits. The new profit sharing ratio will be 3 : 2 : 3. C brought in Rs. 3,00,000 for his capital an Rs. 50,000 for his share of premium for goodwill. On 31st March, 2018, the date of admission, the balance sheet was as follows: Balance Sheet as at 31st March, 2018

Liabilities		Amt (Rs.)	Assets	Amt (Rs.)
Creditors		60,000	Cash	90,000
Employees Provident Fund		20,000	Debtors	80,000
Capital A/cs			Stock	1,50,000
A	4,00,000		Furniture	50,000
B	1,00,000	5,00,000	Machinery	2,10,000
		5,80,000		5,80,000

It was agreed that (i) Stock found undervalued by Rs. 50,000. (ii) Machinery will be depreciated to 88% and furniture be written down by 4%. (iii) A provision of 5% for doubtful debts will be made on debtors. (iv) The capital accounts of all the partners were adjusted in the new profit sharing ratio after admission. For surplus or deficiency, the current accounts were to be opened. Prepare revaluation account, partners' capital account and the balance sheet of the new firm.

Answer:

Loss on revaluation account = Rs. 5,000 Balance of partner's capital account A = Rs. 1,04,000 B = Rs. 64,000 Total of balance sheet = Rs. 3,70,000 Overdraft balance of bank account =Rs. 17,000 Or Profit on revaluation account = Rs. 18,800 Balance of partner's capital account A = Rs. 3,00,000, B = Rs. 2,00,000, C = Rs. 3,00,000 A's current A/c = Rs. 1,64,100 (Cr), B's current A/c = Rs. 95,300 (Dr) Total of balance sheet = Rs. 10,44,100