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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Ram and Shyam share profits in 3 : 2. Their Balance Sheet as at 31st March, 2024 showed: Creditors ₹70,000, General Reserve ₹25,000, Employees’ Provident Fund ₹55,000, Capitals – Ram ₹1,50,000, Shyam ₹1,00,000; and assets – Cash at Bank ₹25,000, Debtors ₹1,62,500 less Provision ₹12,500 (₹1,50,000), Stock ₹82,500, Machinery ₹1,42,500. Mahesh is admitted for a 1/5th share, acquired wholly from Shyam: (i) Mahesh brings ₹25,000 goodwill premium; (ii) a debtor whose ₹7,500 was written off paid ₹5,000 in settlement; (iii) a workmen’s compensation claim of ₹12,500 to be provided; (iv) Machinery undervalued by ₹5,000, Stock valued 10% above market value; (v) Mahesh brings capital equal to 20% of the combined capitals of Ram and Shyam after adjustments. Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet.
Revaluation Account
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Claim against Workmen Compensation | 12,500 | By Bad Debts Recovered A/c | 5,000 |
| To Stock A/c (82,500 × 10/110) | 7,500 | By Machinery A/c | 5,000 |
| By Loss (Ram 6,000; Shyam 4,000) | 10,000 | ||
| Total | 20,000 | Total | 20,000 |
Partners’ Capital Accounts
| Particulars (Dr.) | Ram | Shyam | Mahesh | Particulars (Cr.) | Ram | Shyam | Mahesh |
|---|---|---|---|---|---|---|---|
| To Revaluation A/c (Loss) | 6,000 | 4,000 | – | By Balance b/d | 1,50,000 | 1,00,000 | – |
| To Balance c/d | 1,59,000 | 1,31,000 | 58,000 | By Premium for Goodwill A/c | – | 25,000 | – |
| By General Reserve A/c | 15,000 | 10,000 | – | ||||
| By Bank A/c (Capital) | – | – | 58,000 | ||||
| Total | 1,65,000 | 1,35,000 | 58,000 | Total | 1,65,000 | 1,35,000 | 58,000 |
Balance Sheet as at 1st April, 2024
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Claim for Workmen Compensation | 12,500 | Bank (25,000 + 25,000 + 58,000 + 5,000) | 1,13,000 |
| Employees’ Provident Fund | 55,000 | Machinery (1,42,500 + 5,000) | 1,47,500 |
| Creditors | 70,000 | Stock (82,500 – 7,500) | 75,000 |
| Capitals: Ram 1,59,000; Shyam 1,31,000; Mahesh 58,000 | 3,48,000 | Debtors (1,62,500 – 12,500) | 1,50,000 |
| Total | 4,85,500 | Total | 4,85,500 |
Working Note: New ratio = 3 : 1 : 1; as Mahesh takes his whole share from Shyam, the premium ₹25,000 goes entirely to Shyam. Mahesh’s capital = 20% of (₹1,59,000 + ₹1,31,000) = ₹58,000.
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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