Question 24 Chapter 6 of +2-A
24. A, B, and C were partners, sharing profits and losses in the ratio of 2: 2: 1. B decides to retire on 31st March 2019. On the date of his retirement, some of the assets and liabilities appeared in the books as follows:
Creditors 70,000; Building 1,00,000; Plant and Machinery 40,000; Stock of Raw Materials 20,000; Stock of Finished Goods 30,000 and Debtors 20,000.
The following was agreed among the partners on B’s retirement:
a) Building to be appreciated by 20%.
b) Plant and Machinery to be reduced by 10%.
c) A Provision of 5% on Debtors to be created for Doubtful Debts.
d) The stock of Raw Materials to be valued at 18,000 and Finished Goods at 35,000.
e) An Old Computer previously written off was sold for 2,000 as scrap.
f) The firm had to pay 5,000 to an injured employee.
Pass necessary Journal entries to record the above adjustments and prepare the Revaluation Account.
The solution of Question 24 Chapter 6 of +2-A: –
| Revaluation A/c |
|||||
| Particular |
Amount | Particular | Amount | ||
| To Plant and Machinery A/c | 4,000 | By Building A/c | 20,000 | ||
| To Provision for Doubtful Debts A/c | 1,000 | By Stock of Finished Goods A/c | 5,000 | ||
| To Stock of Raw Materials A/c | 2,000 | By Computer A/c | 2,000 | ||
| To Workmen’s Compensation Claim A/c | 5,000 | ||||
| To Profit transferred to | |||||
| A’s Capital | 6,000 | ||||
| B’s Capital | 6,000 | ||||
| C’s Capital | 3,000 | 15,000 | |||
| 27,000 | 27,000 | ||||
Journal Entries
| Date | Particulars |
L.F. | Debit | Credit | |
| Building A/c | Dr. | 12,000 | |||
| Stock of Finished Good A/c | Dr. | 5,000 | |||
| Computer A/c | Dr. | 2,000 | |||
| To Revaluation A/c | 27,000 | ||||
| (Being Increase in the value of assets transferred to revaluation account) | |||||
| Revaluation A/c | Dr. | 12,000 | |||
| To Plant and Machinery A/c | 4,000 | ||||
| To Provision for Doubtful Debts A/c | 1,000 | ||||
| To Stock of Raw Material A/c | 2,000 | ||||
| To Workmen’s Compensation Claim A/c | 5,000 | ||||
| (Being decrease in the value of Machinery transferred to the revaluation account) | |||||
| Revaluation A/c | Dr. | 15,000 | |||
| To X’s Capital A/c | 6,000 | ||||
| To Y’s Capital A/c | 6,000 | ||||
| To Z’s Capital A/c | 3,000 | ||||
| (Being Revaluation profit transferred to Partners′ Capital Accounts) | |||||
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
