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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Kusum, Sneh and Usha shared profits and losses in proportion to their capitals – ₹4,00,000, ₹6,00,000 and ₹4,00,000. Their Balance Sheet as at 31st March, 2025 showed Employees’ Provident Fund ₹70,000, Workmen Compensation Reserve ₹30,000, Sundry Creditors ₹1,00,000; Land and Building ₹4,00,000, Machinery ₹6,00,000, Closing Stock ₹2,00,000, Sundry Debtors ₹2,20,000 less Provision ₹20,000, Cash at Bank ₹2,00,000. Kusum retired on 1st April, 2025, and it was agreed: (a) Land and Building be appreciated by 30%. (b) Machinery be depreciated by 30%. (c) There were Bad Debts of ₹35,000. (d) The claim against Workmen Compensation Reserve was estimated at ₹15,000. (e) Goodwill of the firm was valued at ₹2,80,000, and Kusum’s share was adjusted against the Capital Accounts of Sneh and Usha, who will share future profits in the ratio of 3 : 4. (f) Total capital of the new firm will remain ₹14,00,000, in the new profit-sharing ratio, actual cash being brought in as required. (g) Kusum to be paid ₹1,00,000 in cash and the balance transferred to her Loan Account. Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm. (AI 2012 C, Modified)
REVALUATION ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Machinery A/c | 1,80,000 | By Land and Building A/c | 1,20,000 |
| To Bad Debts A/c (35,000 – 20,000) | 15,000 | By Loss transferred to: | |
| Kusum’s Capital A/c 21,429 | |||
| Sneh’s Capital A/c 32,142 | |||
| Usha’s Capital A/c 21,429 | 75,000 | ||
| Total | 1,95,000 | Total | 1,95,000 |
PARTNERS’ CAPITAL ACCOUNTS
| Particulars | Kusum | Sneh | Usha | Particulars | Kusum | Sneh | Usha |
|---|---|---|---|---|---|---|---|
| To Revaluation A/c (Loss) | 21,429 | 32,142 | 21,429 | By Balance b/d | 4,00,000 | 6,00,000 | 4,00,000 |
| To Bank A/c | 1,00,000 | – | – | By Workmen Compensation Reserve A/c | 4,286 | 6,428 | 4,286 |
| To Kusum’s Loan A/c | 3,62,857 | – | – | By Usha’s Capital A/c | 80,000 | – | – |
| To Kusum’s Capital A/c | – | – | 80,000 | ||||
| To Balance c/d | – | 5,74,286 | 3,02,857 | ||||
| Total | 4,84,286 | 6,06,428 | 4,04,286 | Total | 4,84,286 | 6,06,428 | 4,04,286 |
| To Balance c/d | 6,00,000 | 8,00,000 | By Balance b/d | 5,74,286 | 3,02,857 | ||
| By Bank A/c | 25,714 | 4,97,143 | |||||
| Total | 6,00,000 | 8,00,000 | Total | 6,00,000 | 8,00,000 |
BALANCE SHEET as at 1st April, 2025 (after Kusum’s Retirement)
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Sundry Creditors | 1,00,000 | Land and Building | 5,20,000 |
| Employees’ Provident Fund | 70,000 | Machinery | 4,20,000 |
| Workmen’s Compensation Claim | 15,000 | Stock | 2,00,000 |
| Kusum’s Loan A/c | 3,62,857 | Sundry Debtors (2,20,000 – 35,000) | 1,85,000 |
| Capitals: Sneh 6,00,000; Usha 8,00,000 | 14,00,000 | Bank | 6,22,857 |
| Total | 19,47,857 | Total | 19,47,857 |
Working Notes: Old ratio (Kusum:Sneh:Usha) = 2:3:2. New ratio Sneh:Usha = 3:4; Sneh’s gain = nil, Usha’s gain = 2/7 — so only Usha compensates Kusum with the full ₹80,000 (2,80,000 × 2/7). Fixed total capital ₹14,00,000 split 3:4 gives Sneh ₹6,00,000 (brings in ₹25,714) and Usha ₹8,00,000 (brings in ₹4,97,143).
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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