Question 38 Chapter 3 of Class 12 Part - 1 VK Publication

Question 35 Chapter 3 of Class 12 Part – 1

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The solution of Question 38 Chapter 3 of Class 12 Part – 1: –

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

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

38. L and G are partners sharing profits and losses in the ratio of4:3. Their Balance Sheet as at 31st March, 2018 stood as follows:

Liabilities	Rs.	Assets	Rs.
Sundry Creditors	28,000	Cash	20,000
General Reserve	42,000	Sundry Debtors	1,20,000
Capital A/cs:		Stock	1,40,000
L 2,40,000		Fixed Assets	1,50,000
G 1,20,000	3,60,000
	4,30,000		4,30,000

They decided that with effect from 1st April, 2018 they will share profits and losses in the ratio of 2:1. For this purpose they decided that:
(i) Fixed assets are to be depreciated by 10%.
(ii) A provision of 6% to be made on debtors for doubtful debts.
(iii) Stock be valued at Rs. 1,90,000.
(iv) An amount of Rs. 3,700 included in creditors is not likely to be claimed.
Partners decided to record the revised values in the books. However, they do not want to disturb the reserves. You are required to pass journal entries, and prepare capital accounts of the partners and the revised Balance Sheet

The solution of Question 38 Chapter 3 of Class 12 Part – 1: –

Journal Entry

Date	Particulars		L . F	Dr. ₹	Cr. ₹
2018	L’s Capital A/c	Dr.		4,000
April 1	To G’s Capital A/c				4,000
	( Being proportionate share of General Reserve adjusted between partners)
	Revaluation A/c	Dr.		22,200
	To Fixed Assets A/c				15,000
	To Provision for Doubtful Debts A/c				7,200
	( Being fixed assets decreased and provision for doubtful debts provided)
	Stock A/c	Dr.		50,000
	Creditors A/c	Dr.		3,700
	To Revaluation A/c				53,700
	( Being stock increased and creditors decreased)
	Revaluation A/c	Dr.		31,500
	To L’s Capital A/c				18,000
	To G’s Capital A/c				13,500
	( Being profit on revaluation transferred to partners’ capital accounts)

Partner Capital Account

Particulars	L	G	Particulas	L	G
To G’s Capital A/c	4,000	–	By Balance b/d	2,40,000	1,20,000
To Balance c/d	2,54,000	1,37,500	By Revaluation A/C	18,000	13,500
			By L’s Capital A/c	–	4,000
	2,58,000	1,37,500		2,58,000	1,37,500

Balance Sheet of R,S and T

(as at 1st April 2015)

Liabilities		Amount	Assets	Amount
Creditors		24,300	Cash	20,000
General Reserves		42,000	Debtors	1,1,800
To Profit transferred to:			Stock	1,90,000
L’s capital A/c	2,54,000		Fixed Assets	1,35,000
G’s capital A/c	1,37,500	3,91,500
		4,57,800		4,57,800

Working Notes:
1. Old Ratio of P,Q and R = 5:4:3
New Ratio of P,Q and R = 4:3:2
Sacrificing ratio = old share – new share
L = 4/7-2/3=(12-14)/21=(-2)/21 (Gain)
G = 3/7-1/3=(9-7)/21=2/21 (Sacrifice)
2. Adjustment of General Reserve = 42,000 x 2/21= Rs. 4,000

Revaluation Account

Particulars	Amount	Particulars	Amount
To fixed assets A/c	15,000	By Stock A/c	50,000
To Provision for Doubtful Debts A/c	7,200	By Creditors A/c	3,700
To Profit Transferred to
L’s Capital A/c 18,000