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Partners' Capital Accounts, Revaluation Account and Balance Sheet
Q. 19. A and B are partners in a firm sharing profits and losses in the ratio 3 : 1. They admit C for 1/4th share on 31st March, 2014 when their Balance Sheet was as follows :
The following adjustments were agreed upon :
(a) C brings in Rs. 16,000 as goodwill and proportional capital.
(b) Bad debts amounted to Rs. 3,000.
(c) Market value of investment is Rs. 4,500.
(d) Liability on account of workmen compensation reserve amounted to Rs. 2,000.
Prepare Revaluation A/c and Partners Capital Accounts. (Sample Paper 2015)
The following adjustments were agreed upon :
(a) C brings in Rs. 16,000 as goodwill and proportional capital.
(b) Bad debts amounted to Rs. 3,000.
(c) Market value of investment is Rs. 4,500.
(d) Liability on account of workmen compensation reserve amounted to Rs. 2,000.
Prepare Revaluation A/c and Partners Capital Accounts. (Sample Paper 2015)
Dear Student
Regards
| Revalution A/c | |||||
| Date | Particulars | Amount (in Rs) | Date | Particulars | Amount (in Rs) |
| Debtors | 1,000 | ||||
| Capital A/c (1,000 in 3:1) | |||||
| A | 750 | ||||
| B | 250 | ||||
| 1,000 | 1,000 | ||||
| Partner's Capital A/c | |||||||
| Particulars | A | B | C | Particulars | A | B | C |
| Revaluation A/c | 750 | 250 | Balance b/d | 54,000 | 35,000 | ||
| Goodwill | 30,000 | 10,000 | Investment Fluctuation Reserve | 1,200 | 400 | ||
| Workmen Compensation Reserve | 3,000 | 1,000 | |||||
| Premium for Goodwill A/c | 12,000 | 4,000 | |||||
| Cash A/c | 23,200 | ||||||
| Bal C/d | 39,450 | 30,150 | 23,200 | ||||
| 70,200 | 40,400 | 23,200 | 70,200 | 40,400 | 23,200 | ||
| Balance sheet | |||
| Liabilities | Amount (in Rs) | Assets | Amount (in Rs) |
| Workmen Compensation Liability | 2,000 | Stock | 15,000 |
| Employees Provident Fund | 17,000 | ||
| Investment | 4,500 | ||
| Sundry Debtors | 47,000 | ||
| Cash | 45,300 | ||
| Capital | |||
| A | 39,450 | ||
| B | 30,150 | ||
| C | 23,200 | ||
| 111,800 | 111,800 | ||
| Goodwill Adjustment | ||
| Share of Goodwill of C | 16,000 | |
| Sacrificing Ratio | 3:1 | |
| Distribution in Sacrificing Ratio in capital accounts of : | ||
| A | (16,000 x 3/4) | 12,000 |
| B | (16,000 x 1/4) | 4,000 |
| Capital Calculation of C | ||
| New Profit Sharing Ratio | 2:1:1 | |
| Capital of A and B after all adjustments | (39,450 + 30,150) | 69,600 |
| Cumulative share of A and B after C's Admission | (1 - 1/4) | 3/4 |
| Based on above total capital of firm | (69,600 x 4/3) | 92,800 |
| Proportionate Capital of C | (92,800 x 1/4) | 23,200 |
Regards
