Question 96 Chapter 5 of +2-A
96. L, M and N were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their Balance Sheet on 31st March, 2015 was as follows:
| Liabilities | Assets | |||
| Creditors | 1,68,000 | Bank | 34,000 | |
| General Reserve | 42,000 | Debtors | 46,000 | |
| Capital’s A/c | Stock | 2,20,000 | ||
| L | 1,20,000 | Investment | 60,000 | |
| M | 80,000 | Furniture | 20,000 | |
| N | 40,000 | 2,40,00 | Machinery | 70,000 |
| 4,50,000 | 4,50,000 |
On the above date, O was admitted as a new partner and it was decided that:
(i) The new profit-sharing ratio between L, M, N and O will be 2 : 2 : 1 : 1.
(ii) Goodwill of the firm was valued at 1,80,000 and O brought his share of goodwill premium in cash.
(iii) The market value of investments was 36,000.
(iv) Machinery will be reduced to 58,000.
(v) A creditor of 6,000 was not likely to claim the amount and hence was to be written off.
(vi) O will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm.
The solution of Question 96 Chapter 5 of +2-A: –
| Revaluation Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| To Investments A/c | 24,000 | By Creditors A/c | 6,000 | ||
| To Machinery A/c | 12,000 | ||||
| Loss on Revaluation | |||||
| L’s Capital | 15,000 | ||||
| M’s Capital | 10,000 | ||||
| N’s Capital | 5,000 | 30,000 | |||
| 36,000 | 36,000 | ||||
| Partners’ Capital Account |
||||
| Particulars | L | M | N | O |
| To Loss on Revaluation A/c | 15,000 | 10,000 | 5,000 | |
| To Balance c/d | 1,56,000 | 84,000 | 42,000 | 56,400 |
| 1,71,000 | 94,000 | 47,000 | 56,400 | |
|
Particulars |
L | M | N | O |
| By Balance B/d | 1,20,000 | 80,000 | 40,000 | |
| By Bank A/c (WN2) | – | – | – | 56,400 |
| By Premium for Goodwill A/c | 30,000 | – | – | – |
| By General Reserve A/c | 21,000 | 14,000 | 7,000 | – |
| 1,71,000 | 94,000 | 47,000 | 56,400 |
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