question_answer

Arun and Varun were partners sharing profits in 3 : 2 ratio. Their balance sheet on 31st March, 2017 was as follows: Balance Sheet as at 31st March, 2017

Liabilities		Amt (Rs.)	Assets	Amt (Rs.)
Capital A/cs			Cash	7,500
Arun	1,37,500		Sundry Debtors	30,000
Varun	75,000	2,12,500	Stock	50,000
Creditors		37,500	Land and Building	1,00,000
			Plant and Machinery	62,500
		2,50,000		2,50,000

They admitted Tarun as partner on the following terms: (i) Tarun is to bring Rs. 62,500 as capital. (ii) They will share future profits in 2 : 2 : 1 ratio. (iii) Assets and liabilities are revalued as Land and building at Rs. 1,25,000, depreciate plant and machinery @10% per annum, provision for doubtful debts Rs. 2,500, stock at Rs. 45,000, Rs. 2,500 be reserved for bills discounted. Show memorandum revaluation account.

Answer:

Dr                                                         Memorandum Revaluation Account                                        Cr

Particulars		Amt (Rs.)	Particulars		Amt (Rs.)
To Plant and Machinery		6,250	By Land and Building		25,000
To Provision for Doubtful Debts		2,500
To Stock		5,000
To Reserve for Bills Discounted		2,500
To Profit on Revaluation Transferred to
Arun's Capital A/c	5,250
Varun's Capital A/c	3,500	8,750
		25,000			25,000
To Land and Building		25,000	By Plant and Machinery		6,250
			By Provision for Doubtful Debts		2,500
			By Stock		5,000
			By Reserve for Bills Discounted		2,500
			By Loss on Revaluation Transferred to
			Arun's Capital A/c	3,500
			Varun's Capital A/c	3,500
			Tarun's Capital A/c	1,750	8,750
		25,000			25,000