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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Badal and Bijli share profits in 3 : 2. Their Balance Sheet as at 31st March, 2019 showed: Capitals – Badal ₹1,50,000, Bijli ₹90,000; Badal’s Current A/c ₹12,000 (Cr.); Investment Fluctuation Reserve ₹24,000; Bills Payable ₹8,000; Creditors ₹26,000; and assets – Building ₹1,50,000, Investments ₹73,000, Stock ₹43,000, Debtors ₹20,000, Cash ₹22,000, Bijli’s Current A/c ₹2,000 (Dr.). Raina is admitted for a 1/6th share: (i) Raina brings ₹40,000 capital; capitals of Badal and Bijli are adjusted on the basis of Raina’s capital through Current Accounts; (ii) Raina brings ₹12,000 goodwill premium in cash; (iii) Building overvalued by ₹15,000 and Stock by ₹3,000; (iv) a provision of 10% on debtors. Prepare the Revaluation Account, and the Capital and Current Accounts. (CBSE 2020)
Revaluation Account
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Building A/c | 15,000 | By Loss (Badal 12,000; Bijli 8,000) | 20,000 |
| To Stock A/c | 3,000 | ||
| To Provision for Doubtful Debts A/c | 2,000 | ||
| Total | 20,000 | Total | 20,000 |
Partners’ Capital Accounts
| Particulars (Dr.) | Badal | Bijli | Raina | Particulars (Cr.) | Badal | Bijli | Raina |
|---|---|---|---|---|---|---|---|
| To Badal’s / Bijli’s Current A/c | 30,000 | 10,000 | – | By Balance b/d | 1,50,000 | 90,000 | – |
| To Balance c/d | 1,20,000 | 80,000 | 40,000 | By Cash A/c (Capital) | – | – | 40,000 |
| Total | 1,50,000 | 90,000 | 40,000 | Total | 1,50,000 | 90,000 | 40,000 |
Partners’ Current Accounts
| Particulars (Dr.) | Badal | Bijli | Particulars (Cr.) | Badal | Bijli |
|---|---|---|---|---|---|
| To Balance b/d | – | 2,000 | By Balance b/d | 12,000 | – |
| To Revaluation A/c (Loss) | 12,000 | 8,000 | By Investment Fluctuation Reserve | 14,400 | 9,600 |
| To Balance c/d | 51,600 | 14,400 | By Premium for Goodwill A/c | 7,200 | 4,800 |
| By Capital A/c (adjustment) | 30,000 | 10,000 | |||
| Total | 63,600 | 24,400 | Total | 63,600 | 24,400 |
Working Note: New ratio = 3 : 2 : 1. New total capital = ₹40,000 × 6 = ₹2,40,000 → Badal ₹1,20,000, Bijli ₹80,000, Raina ₹40,000; the excess capital of Badal (₹30,000) and Bijli (₹10,000) is transferred to their Current Accounts. IFR ₹24,000, premium ₹12,000 and the revaluation loss ₹20,000 are all shared in 3 : 2 through the Current Accounts.
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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