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Question 64 Chapter 5 of +2-Part-1
64. ( revaluation A/c/ Partner’s Cap. A/c/B/S) Ram & Rahim were partners in the firm sharing profit & losses in the ratio 3: 2 respectively . their balance sheet on 31st , December , 2018 was as follows :
| Liabilities | Rs. | Assets | Rs. |
| Creditors | 28,000 | Cash | 2,000 |
| Bills payable | 22,000 | Bank | 8,000 |
| Capitals : | Debtors | 30,000 | |
| Ram 50,000 | Stock | 15,000 | |
| Rahim 30,000 | 80,000 | Plant | 33,000 |
| Building | 42,000 | ||
| 1,30,000 | 1,30,000 |
They agreed to admit Rajan with effect from 1st January 2019 with a 1/4th share in Profits on the following terms:
(a) Rajan will bring in capital to the extent of 1/4th of the capital of the new firm after adjustments have been made.
(b) Buildings are to be appreciated by Rs. 8,000 and plants to be depreciated by Rs. 9,000.
(c) The provision for debtors is to be created Rs. 7,000.
(d) The goodwill of the firm was valued at Rs. 30,000.
Prepare the Revaluation Account, Partner's Capital Accounts, and the Balance Sheet of the firm immediately after Rajan's admission.
Revaluation account
| Particulars |
Amount | Particulars | Amount | ||
|---|---|---|---|---|---|
| To plant & machinery | 9,000 | By Building A/c | 8,000 | ||
| To Provision for doubtful debts | 7,000 | ||||
| By loss : | |||||
| Ram | 4,800 | ||||
| Rahim | 3,200 | 8,000 | |||
| 16,000 | 16,000 | ||||
Partners’ Capital Account
| Particulars | Ram | Rahim | Rajan | Particulars | Ram | Rahim | Rajan |
|---|---|---|---|---|---|---|---|
| To Revaluation A/c | 4,800 | 3,200 | By Balance b/d | 50,000 | 30,000 | ||
| By Cash A/c | 26,500 | ||||||
| By Rajan’s current A/c | 4,500 | 3,000 | |||||
| To Balance c/d | 49,700 | 29,800 | 26,500 | ||||
| 54,500 | 33,000 | 26,500 | 54,500 | 33,000 | 26,500 |
Balance Sheet
| Liabilities |
Amount | Assets | Amount | ||
|---|---|---|---|---|---|
| Sundry Creditors | 28,000 | Cash | 2,000 | ||
| Bills payable | 22,000 | Debtors | 30,000 | ||
| Capital Accounts | Less provision For debts | 7,000 | 23,000 | ||
| Ram | 49,700 | Stock | 15,000 | ||
| Rahim | 29,800 | Buildings | 50,000 | ||
| Rajan | 26,500 | 1,06,000 | Plants | 24,000 | |
| Bank (8000+26,500) | 34,500 | ||||
| By Rajan’s current A/c | 7,500 | ||||
| 1,21,600 | 1,56,000 | ||||
WORKING NOTES :
Calculation of proportionate capital of Rajan
Let total profits of the firm = 1
| Share of profit given to Rajan | = | 1 |
| 4 |
| Combined share | = | 1 | - | 1 |
| 4 | ||||
| = | 3 | |||
| 4 |
Calculate Proportionate capital of Rajan :-
Total capital of New firm = Combined adjusted capital of Ram & Rahim X Reverse share of remaining partners Ram & Rahim
| Total capital of New firm | = | ₹ 70,500 | X | 4 |
| 3 | ||||
| = | 1,06,000 |
| Rajan's Share | = | ₹ 1,06,000 | X | 1 |
| 3 | ||||
| = | ₹ 26,500 |
Comment if you have any questions.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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