Question 23 Chapter 4 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 23 Chapter 4 of +2- Part-

Question 23 Chapter 4 of +2-Part-1

23. (Revaluation by passing a single adjustment entry) P, Q and R are sharing profits and losses in the ratio of 5:3:2. They decided to share future profits and losses in the ratio of 2:3:5 with effect from 1st April,2016. They also decided to record the effect of following revaluations without affecting the book value of assets and liabilities by passing a single adjustment entry:

  Book Value Revalued Amount
Land & Building 2,00,000 3,00,000
Equipment 3,00,000 2,80,000
Bank Loan 1,00,000 90,000
Outstanding salaries 90,000 1,20,000

 

 

The solution of Question 23 Chapter 4 of +2 Part-1: – 

 

In the Books of _______________
Date Particulars
L.F. Debit Credit
           
  R’s Capital a/c Dr.   18,000  
  To P’s Capital a/c       18,000
  (Being revaluation of assets and liabilities adjusted through capital accounts)        
           

 

Working Notes: –

Adjustment for revaluation of assets on change in profit sharing ratio:
Particular
P Q R
As per old ratio 5:3:2      
Land & Building   50,000(Cr.) 30,000(Cr) 20,000(cr)
Equipment   10,000(Dr.) 6,000(Dr.) 4,000(Dr.)
Bank Loan   5,000(Cr.) 3,000(Cr.) 2,000(Cr.)
Outstanding Salaries   15,000(Cr.) 9,000(Cr.) 6,000(Cr.)
Total   30,000(Cr.) 18,000(Cr.) 12,000(Cr.)

 

Adjustment for revaluation of assets on change in profit sharing ratio:
Particular
P Q R
As per New ratio 2:3:5      
Land & Building   20,000(Cr.) 30,000(Cr) 50,000(cr)
Equipment   4,000(Dr.) 6,000(Dr.) 6,000(Dr.)
Bank Loan   2,000(Cr.) 3,000(Cr.) 5,000(Cr.)
Outstanding Salaries   6,000(Cr.) 9,000(Cr.) 15,000(Cr.)
Total   30,000(Cr.) 18,000(Cr.) 12,000(Cr.)
Adjustment   18,000(Cr.)   18,000(CD.)

 

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Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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