Question 25 Chapter 4 of Class 12 Part

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Question 25 Chapter 4 of Class 12 Part – 1 Usha Publication

25. (Journal/ Capital a/c/ Balance sheet) X and Y are partners sharing profits in 4:3 ratio. The balance sheet as on 31st March 2018 was as follows:

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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:

Fixed assets to be depreciated by 10%.
A provision of 6% is made on debtors for doubtful debts.
Stock is valued at Rs.95,000.
An amount of Rs.1,850 included in creditors is not likely to be claimed.
Partners decide to record the revised values in the books. However, they do not want to disturb the reserve. You are required to pass the journal entries, prepare the capital accounts of partners and the revised balance sheet.

The solution of Question 25 Chapter 4 of Class 12 Part – 1 Usha Publication: –

Day - 65 | Solution of Questions Reconstitution of firm Chapter No. 4 | Accounts class 12 | PSEB |

Old Ratio of X & Y	=	4: 3
New Ratio of X & Y	=	2: 1

Calculate the Sacrificing or Gaining Ratio of Partners
Sacrificing or Gaining Ratio = Old Ratio – New Ratio

X’s Sacrificing/Gaining Share	=	4	–	2
		7		3

	=	12 – 14
	=	21

	=	-2	(Gain)
		21

Y’s Sacrificing/Gaining Share	=	3	–	1
		7		3

	=	9 – 7
	=	21

	=	2	(Sacrifice)
		21

Journal
Date	Particulars		L.F.	Debit	Credit

(i)	Revaluation a/c	Dr.		11,100
	To Provision for doubtful debts a/c				7,500
	To Fixed assets a/c				3,600
	(Being assets revalued in the books)

(ii)	Stock a/c	Dr.		25,000
	Sundry Creditors a/c	Dr.		1,850
	To Revaluation a/c				26,850
	(Being revaluation of assets and liabilities recoded in the books)

(iii)	Revaluation a/c	Dr.		15750
	To X’s Capital a/c (Rs.15,750×4/7)				9000
	To Y’s Capital a/c (Rs.15,750×3/7)				6750
	(Being profit on revaluation distributed among partner in old profit-sharing ratio i.e., 4 : 3)

(iv)	X’s Capital a/c (21,000*2/21)	Dr.		2,000
	To Y’s Capital a/c				2,000
	(Being adjustment in the capital for reserve due to change in profit ratio)

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