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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Madhu and Vidhi share profits in the ratio of 2 : 3. Their Balance Sheet as at 31st March, 2016 showed: Madhu’s Capital ₹5,20,000, Vidhi’s Capital ₹3,00,000, General Reserve ₹30,000, Bills Payable ₹1,50,000; and assets – Land and Building ₹3,00,000, Machinery ₹2,80,000, Stock ₹80,000, Debtors ₹3,00,000 less Provision ₹10,000 (₹2,90,000), Bank ₹50,000. Gayatri is admitted from 1st April, 2016, the new ratio being 2 : 3 : 5. Gayatri brings ₹4,00,000 capital and her share of goodwill premium in cash. (a) Goodwill valued at ₹3,00,000; (b) Land and Building undervalued by ₹26,000; (c) Provision for Doubtful Debts to be 5% of debtors; (d) a claim of ₹6,000 on account of workmen compensation. Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet.
Revaluation Account
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Provision for Doubtful Debts A/c | 5,000 | By Land and Building A/c | 26,000 |
| To Claim against Workmen Compensation | 6,000 | ||
| To Profit (Madhu 6,000; Vidhi 9,000) | 15,000 | ||
| Total | 26,000 | Total | 26,000 |
Partners’ Capital Accounts
| Particulars (Dr.) | Madhu | Vidhi | Gayatri | Particulars (Cr.) | Madhu | Vidhi | Gayatri |
|---|---|---|---|---|---|---|---|
| To Balance c/d | 5,98,000 | 4,17,000 | 4,00,000 | By Balance b/d | 5,20,000 | 3,00,000 | – |
| By Bank A/c (Capital) | – | – | 4,00,000 | ||||
| By General Reserve A/c | 12,000 | 18,000 | – | ||||
| By Premium for Goodwill A/c | 60,000 | 90,000 | – | ||||
| By Revaluation A/c | 6,000 | 9,000 | – | ||||
| Total | 5,98,000 | 4,17,000 | 4,00,000 | Total | 5,98,000 | 4,17,000 | 4,00,000 |
Balance Sheet as at 1st April, 2016
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Bills Payable | 1,50,000 | Bank (50,000 + 4,00,000 + 1,50,000) | 6,00,000 |
| Claim for Workmen Compensation | 6,000 | Debtors (3,00,000 – 15,000) | 2,85,000 |
| Capitals: Madhu 5,98,000; Vidhi 4,17,000; Gayatri 4,00,000 | 14,15,000 | Stock | 80,000 |
| Machinery | 2,80,000 | ||
| Land and Building (3,00,000 + 26,000) | 3,26,000 | ||
| Total | 15,71,000 | Total | 15,71,000 |
Working Note: Gayatri’s share of goodwill = ₹3,00,000 × 5/10 = ₹1,50,000, credited to Madhu and Vidhi in the sacrificing ratio 2 : 3 (Madhu ₹60,000; Vidhi ₹90,000).
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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