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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
L, M and N share profits in 3 : 2 : 1. Their Balance Sheet on 31st March, 2015 showed: Creditors ₹1,68,000, General Reserve ₹42,000, Capitals – L ₹1,20,000, M ₹80,000, N ₹40,000; and assets – Bank ₹34,000, Debtors ₹46,000, Stock ₹2,20,000, Investments ₹60,000, Furniture ₹20,000, Machinery ₹70,000. O is admitted: (i) new ratio 2 : 2 : 1 : 1; (ii) goodwill valued at ₹1,80,000, O brings his share in cash; (iii) market value of investments ₹36,000; (iv) machinery reduced to ₹58,000; (v) a creditor of ₹6,000 written off; (vi) O brings proportionate capital for a 1/6th share. Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet.
Revaluation Account
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Investments A/c | 24,000 | By Creditors A/c | 6,000 |
| To Machinery A/c | 12,000 | By Loss (L 15,000; M 10,000; N 5,000) | 30,000 |
| Total | 36,000 | Total | 36,000 |
Partners’ Capital Accounts
| Particulars (Dr.) | L | M | N | O | Particulars (Cr.) | L | M | N | O |
|---|---|---|---|---|---|---|---|---|---|
| To Revaluation A/c (Loss) | 15,000 | 10,000 | 5,000 | – | By Balance b/d | 1,20,000 | 80,000 | 40,000 | – |
| To Balance c/d | 1,56,000 | 84,000 | 42,000 | 56,400 | By General Reserve A/c | 21,000 | 14,000 | 7,000 | – |
| By Premium for Goodwill A/c | 30,000 | – | – | – | |||||
| By Cash A/c (Capital) | – | – | – | 56,400 | |||||
| Total | 1,71,000 | 94,000 | 47,000 | 56,400 | Total | 1,71,000 | 94,000 | 47,000 | 56,400 |
Balance Sheet after O’s admission
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors (1,68,000 – 6,000) | 1,62,000 | Bank (34,000 + 56,400 + 30,000) | 1,20,400 |
| Capitals: L 1,56,000; M 84,000; N 42,000; O 56,400 | 3,38,400 | Debtors | 46,000 |
| Stock | 2,20,000 | ||
| Investments | 36,000 | ||
| Furniture | 20,000 | ||
| Machinery | 58,000 | ||
| Total | 5,00,400 | Total | 5,00,400 |
Working Note: Only L sacrifices (1/6), so O’s goodwill ₹30,000 is credited to L. O’s proportionate capital = total adjusted capital ₹2,82,000 × (1/6) / (5/6) = ₹56,400.
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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