question_answer

Shiva and Anshita are partners in a firm with equal ratio. Balance Sheet as at...

Liabilities		Amt (Rs.)	Assets		Amt (Rs.)
Creditors		86,000	Cash in Hand		77,000
Employees Provident Fund		10,000	Debtors	42,000
Investment Fluctuation Fund		4,000	(-) Provision for Doubtful Debts	(7,000)	35,000
Capital A/cs			Investments		21,000
Shiva	1,19,000		Buildings		98,000
Anshita	1,12,000	2,31,000	Plant and Machinery		1,00,000
		3,31,000			3,31,000

Manav was admitted on that date for \[\frac{1}{4}th\]share of profit on the following terms :

(i) Manav will bring Rs. 50,000 as his share of capital.

(ii) Goodwill of the firm is valued at Rs. 42,000 and Manav will bring his share of goodwill in cash.

(iii) Buildings were appreciated by 20%.

(iv) All debtors were good.

(v) There was a liability of Rs. 10,800 included in creditors which was not likely to arise.

(vi) New profit sharing ratio will be 2 : 1 : 1.

(vii) Capital of Shiva and Anshita will be adjusted on the basis of Manav's share of capital and any excess or deficiency will be adjusted by withdrawing or bringing in cash by the concerned partners as the case may be.

Prepare revaluation account, partners' capital accounts and the balance sheet of the new firm. Or Following is the balance sheet of Harsh, Mahima and Karan as at 31st March, 2017. Balance Sheet as at 31st March, 2017

Liabilities		Amt (Rs.)	Assets		Amt (Rs.)
Employees Provident Fund		70,000	Land and Building		4,00,000
Workmen Compensation Fund		30,000	Machinery		6,00,000
Sundry Creditors		1,00,000	Closing Stock		2,00,000
Capital A/cs			Sundry Debtors	2,20,000
Harsh	4,00,000		(-) Provision for
Mahima	6,00,000		Doubtful Debts	(20,000)	2,00,000
Karan	4,00,000	14,00,000	Cash at Bank		2,00,000
		16,00,000			16,00,000

On 31st March, 2017, Karan desired to retire from the firm and the remaining partners decided to carry on the business. It was agreed to revalue the assets and re-assess the liabilities on that date, on the following basis :

(i) Land and building be appreciated by 30%.

(ii) Machinery be depreciated by 30%.

(iii) There were bad debts of Rs. 35,000.

(iv) The claim on account of workmen compensation fund was estimated at Rs. 15,000.

(v) Goodwill of the firm was valued at? 28,000 and Karan's share of goodwill was adjusted against the capital accounts of the continuing partners Harsh and Mamma who have decided to share future profits in the ratio 3 : 4 respectively.

(vi) Capital of the new firm in total will be the same as before the retirement of Karan and will be in the new profit sharing ratio of the continuing partners.

(vii) Amount due to Karan be settled by paying Rs. 1,00,000 in cash and balance by transferring to his loan account which will be paid later on.

Prepare revaluation account, capital accounts of partners and balance sheet of the new firm after Karan's retirement.

Answer:

Revaluation account (profit) = Rs. 37,400 Partners' capital account (balance) Shiva= Rs. 1,00,000, Anshita =Rs. 50,000, Manav =Rs. 50,000 and total of balance sheet = Rs. 2,85,200 Or Revaluation account (loss) = Rs. 75,000 and Partner's capital account (balance) Harsh = Rs. 6,00,000 Mahima = Rs. 8,00,000 Karan's loan A/c = Rs. 2,89,333.3 and total of balance sheet = Rs. 18,74,333.3