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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Ajay, Salil and Ravi were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Ajay died on 20th February, 2025. The Balance Sheet of the firm on that date showed Creditors ₹19,000, General Reserve ₹20,000, Loan by Ajay ₹7,000, Capitals – Ajay ₹12,000, Salil ₹16,000, Ravi ₹10,000; Profit & Loss A/c (Dr., i.e. accumulated loss) ₹10,000; Machinery ₹41,000, Furniture ₹6,000, Stock ₹9,000, Debtors ₹15,000, Cash ₹3,000. According to the Partnership Deed, the executor of the deceased partner is entitled to: (i) balance in Capital Account; (ii) his share in profit/loss on revaluation — (a) Machinery to be revalued at ₹45,000 and Furniture at ₹7,000; (b) a Provision of 10% to be created for Doubtful Debts; (iii) the amount payable to Ajay to be transferred to his Executors’ Loan Account, to be paid later. Prepare the Revaluation Account, Partners’ Capital Accounts, Ajay’s Executors’ Account and the Balance Sheet of Salil and Ravi, who decided to continue the business keeping their capital balances in their new profit-sharing ratio, any surplus or deficit being transferred to Current Accounts.
REVALUATION ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Provision for Doubtful Debts A/c | 1,500 | By Machinery A/c | 4,000 |
| To Profit transferred to: | By Furniture A/c | 1,000 | |
| Ajay’s Capital A/c 1,750 | |||
| Salil’s Capital A/c 1,050 | |||
| Ravi’s Capital A/c 700 | 3,500 | ||
| Total | 5,000 | Total | 5,000 |
PARTNERS’ CAPITAL ACCOUNTS
| Particulars | Ajay | Salil | Ravi | Particulars | Ajay | Salil | Ravi |
|---|---|---|---|---|---|---|---|
| To Profit & Loss A/c | 5,000 | 3,000 | 2,000 | By Balance b/d | 12,000 | 16,000 | 10,000 |
| To Ajay’s Executors’ A/c | 25,750 | – | – | By Revaluation A/c | 1,750 | 1,050 | 700 |
| To Balance c/d | – | 20,050 | 12,700 | By General Reserve A/c | 10,000 | 6,000 | 4,000 |
| By Loan by Ajay A/c | 7,000 | – | – | ||||
| Total | 30,750 | 23,050 | 14,700 | Total | 30,750 | 23,050 | 14,700 |
| To Salil’s Current A/c | 400 | By Balance b/d | 20,050 | 12,700 | |||
| To Balance c/d | 19,650 | 13,100 | By Ravi’s Current A/c | 400 | |||
| Total | 20,050 | 13,100 | Total | 20,050 | 13,100 |
AJAY’S EXECUTORS’ ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Balance c/d | 25,750 | By Ajay’s Capital A/c | 25,750 |
| Total | 25,750 | Total | 25,750 |
BALANCE SHEET (after Ajay’s Death)
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 19,000 | Machinery | 45,000 |
| Ajay’s Executors’ A/c | 25,750 | Furniture | 7,000 |
| Salil’s Current A/c | 400 | Stock | 9,000 |
| Capitals: Salil 19,650; Ravi 13,100 | 32,750 | Debtors 15,000 less Provision 1,500 | 13,500 |
| Cash | 3,000 | ||
| Ravi’s Current A/c | 400 | ||
| Total | 77,900 | Total | 77,900 |
Working Note: Combined adjusted capital of Salil and Ravi = 20,050 + 12,700 = ₹32,750, rearranged in the new ratio 3 : 2: Salil = 32,750 × 3/5 = ₹19,650 (excess ₹400 transferred to his Current A/c); Ravi = 32,750 × 2/5 = ₹13,100 (shortfall ₹400 funded from his Current A/c).
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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