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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
A and B share profits in 3 : 2. Their Balance Sheet as at 31st March, 2018 showed: Capitals – A ₹1,04,000, B ₹52,000; Creditors ₹1,54,000; Employees’ Provident Fund ₹16,000; Workmen Compensation Fund ₹10,000; Contingency Reserve ₹10,000; and assets – Cash ₹8,000, Debtors ₹37,600 less Provision ₹1,600 (₹36,000), Stock ₹60,000, Prepaid Insurance ₹6,000, Plant and Machinery ₹76,000, Building ₹1,40,000, Furniture ₹20,000. C is admitted with ₹64,000 capital and ₹15,000 goodwill; new ratio 5 : 3 : 2. (i) Stock down 5%; (ii) Provision for Doubtful Debts ₹2,000; (iii) Furniture down 10%; (iv) Building valued at ₹1,60,000; (v) capitals of A and B adjusted on the basis of C’s capital by cash. Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet. (CBSE 2019)
Revaluation Account
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Stock A/c | 3,000 | By Building A/c | 20,000 |
| To Provision for Doubtful Debts A/c | 400 | ||
| To Furniture A/c | 2,000 | ||
| To Profit (A 8,760; B 5,840) | 14,600 | ||
| Total | 20,000 | Total | 20,000 |
Partners’ Capital Accounts
| Particulars (Dr.) | A | B | C | Particulars (Cr.) | A | B | C |
|---|---|---|---|---|---|---|---|
| To Balance c/d | 1,60,000 | 96,000 | 64,000 | By Balance b/d | 1,04,000 | 52,000 | – |
| By Revaluation A/c | 8,760 | 5,840 | – | ||||
| By Premium for Goodwill A/c | 7,500 | 7,500 | – | ||||
| By Workmen Compensation Fund | 6,000 | 4,000 | – | ||||
| By Contingency Reserve A/c | 6,000 | 4,000 | – | ||||
| By Cash A/c (Capital / brought in) | 27,740 | 22,660 | 64,000 | ||||
| Total | 1,60,000 | 96,000 | 64,000 | Total | 1,60,000 | 96,000 | 64,000 |
Balance Sheet after C’s admission
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 1,54,000 | Cash (8,000 + 64,000 + 15,000 + 50,400) | 1,37,400 |
| Employees’ Provident Fund | 16,000 | Debtors (37,600 – 2,000) | 35,600 |
| Capitals: A 1,60,000; B 96,000; C 64,000 | 3,20,000 | Stock (60,000 – 3,000) | 57,000 |
| Prepaid Insurance | 6,000 | ||
| Plant and Machinery | 76,000 | ||
| Building | 1,60,000 | ||
| Furniture (20,000 – 2,000) | 18,000 | ||
| Total | 4,90,000 | Total | 4,90,000 |
Working Note: Sacrificing ratio 1 : 1; premium ₹15,000 shared equally. New total capital = ₹64,000 × 10/2 = ₹3,20,000 → A ₹1,60,000, B ₹96,000, C ₹64,000; A brings in ₹27,740 and B ₹22,660.
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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