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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Ishu and Vishu share profits in 3 : 2. Their Balance Sheet as at 31st March, 2025 showed: Creditors ₹66,000, General Reserve ₹10,000, Investment Fluctuation Reserve ₹4,000, Capitals – Ishu ₹1,19,000, Vishu ₹1,12,000; and assets – Cash at Bank ₹87,000, Debtors ₹42,000 less Provision ₹7,000 (₹35,000), Investments (Market Value ₹19,000) ₹21,000, Building ₹98,000, Plant and Machinery ₹70,000. Nishu is admitted for a 1/6 share: (a) Nishu brings ₹56,000 capital; (b) goodwill valued at ₹84,000, Nishu brings his share in cash; (c) Plant and Machinery appreciated 20%; (d) all debtors good; (e) a ₹9,800 liability in creditors not likely to arise; (f) capitals of Ishu and Vishu adjusted on the basis of Nishu’s capital by cash. Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet.
Revaluation Account
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Profit (Ishu 18,480; Vishu 12,320) | 30,800 | By Plant and Machinery A/c | 14,000 |
| By Provision for Doubtful Debts A/c | 7,000 | ||
| By Creditors A/c | 9,800 | ||
| Total | 30,800 | Total | 30,800 |
Partners’ Capital Accounts
| Particulars (Dr.) | Ishu | Vishu | Nishu | Particulars (Cr.) | Ishu | Vishu | Nishu |
|---|---|---|---|---|---|---|---|
| To Cash A/c (withdrawn) | – | 22,720 | – | By Balance b/d | 1,19,000 | 1,12,000 | – |
| To Balance c/d | 1,68,000 | 1,12,000 | 56,000 | By Cash A/c (Capital / brought in) | 14,920 | – | 56,000 |
| By Premium for Goodwill A/c | 8,400 | 5,600 | – | ||||
| By Revaluation A/c | 18,480 | 12,320 | – | ||||
| By Investment Fluctuation Reserve | 1,200 | 800 | – | ||||
| By General Reserve A/c | 6,000 | 4,000 | – | ||||
| Total | 1,68,000 | 1,34,720 | 56,000 | Total | 1,68,000 | 1,34,720 | 56,000 |
Balance Sheet after Nishu’s admission
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors (66,000 – 9,800) | 56,200 | Cash at Bank | 1,49,200 |
| Capitals: Ishu 1,68,000; Vishu 1,12,000; Nishu 56,000 | 3,36,000 | Debtors | 42,000 |
| Investments | 19,000 | ||
| Building | 98,000 | ||
| Plant and Machinery | 84,000 | ||
| Total | 3,92,200 | Total | 3,92,200 |
Working Note: IFR ₹4,000 – investment fall ₹2,000 = ₹2,000 distributed 3 : 2. New total capital = ₹56,000 × 6 = ₹3,36,000 → Ishu ₹1,68,000, Vishu ₹1,12,000; Ishu brings in ₹14,920 and Vishu withdraws ₹22,720.
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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