Kaustubh and Ketan are partners sharing profits and losses in the ratio of 1 : 1. Their Balance Sheet as on 31st March 2023 was as follows:Balance Sheet as on 31st March 2023LiabilitiesAmount (₹)AssetsAmount (₹)Capital Accounts:Building1,20,000Kaustu…

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Q.2 Kaustubh and Ketan are partners sharing profits and losses in the ratio of 1 : 1. Their Balance Sheet as on 31st March 2023 was as follows: Balance Sheet as on 31st March 2023 LiabilitiesAmount (₹)AssetsAmount (₹) Capital Accounts:Building1,20,000 Kaustubh2,00,000Machinery1,40,000 Ketan2,80,000Investment48,000 Creditors68,000Debtors52,000 Bills Payable52,000Stock80,000 Cash1,60,000 6,00,0006,00,000 On 1st April 2023, Pranav joins the firm as a partner for 1/5th share of future profits, on the following terms and conditions: Firm Goodwill is valued at ₹ 4,00,000. Pranav is to bring his share of goodwill in cash. Pranav is to bring in ₹ 2,00,000 as his share of capital. Provision for Bad and Doubtful Debts is to be created at 10% on debtors. Building is to be valued at ₹ 1,60,000. Stock and Machinery is to be reduced by 20%. Prepare: (a) Revaluation Account (b) Partners’ Capital Account (c) Balance Sheet of the New Firm OR Following is the Balance Sheet of Sagar, Suraj and Sahil, who were sharing profit and losses equally. Balance Sheet as on 31st March 2023 LiabilitiesAmount (₹)AssetsAmount (₹) Capital Accounts:Building1,40,000 Sagar87,200Machinery20,000 Suraj70,000Computer35,000 Sahil64,000Goodwill24,000 Reserve fund27,000Debtors 36,000 Less: R.D.D. 1,80034,200 Creditors61,800Bank56,800 3,10,0003,10,000 On 1st April 2023, Sahil retired from the firm on the following terms: Machinery be revalued at ₹ 18,800. Building be appreciated by 10% and computer be reduced by ₹ 3,800. Debtors were all good and R.D.D. was no longer required. Goodwill of the firm be valued at ₹ 36,000. Amount payable to Sahil to be transferred to his Loan Account. Prepare: (a) Profit and Loss Adjustment Account (b) Partners’ Capital Account (c) Balance Sheet of the New firm

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Answer: Revaluation loss ₹ 9,200 (₹ 4,600 each); closing capitals Kaustubh ₹ 2,35,400, Ketan ₹ 3,15,400, Pranav ₹ 2,00,000; new Balance Sheet total ₹ 8,70,800. Working notes Provision for doubtful debts = 10% of ₹ 52,000 = ₹ 5,200. Stock reduced by 20% of ₹ 80,000 = ₹ 16,000 (new value ₹ 64,000). Machinery reduced by 20% of ₹ 1,40,000 = ₹ 28,000 (new value ₹ 1,12,000). Building: ₹ 1,60,000 – ₹ 1,20,000 = ₹ 40,000 increase. Pranav’s share of goodwill = ₹ 4,00,000 × 1/5 = ₹ 80,000, brought in cash. Old ratio 1 : 1; new share of the old partners = 4/5 shared equally = 2/5 each. Sacrifice: Kaustubh 1/2 – 2/5 = 1/10, Ketan 1/2 – 2/5 = 1/10, sacrifice ratio 1 : 1, so ₹ 40,000 each is credited to the old partners. Cash: ₹ 1,60,000 + ₹ 2,00,000 (capital) + ₹ 80,000 (goodwill) = ₹ 4,40,000. (a) Revaluation Account Dr. ParticularsAmount (₹)Cr. ParticularsAmount (₹) To Provision for Doubtful Debts A/c5,200By Building A/c40,000 To Stock A/c16,000By Loss on revaluation transferred to: Kaustubh’s Capital A/c 4,600 Ketan’s Capital A/c 4,6009,200 To Machinery A/c28,000 49,20049,200 (b) Partners’ Capital Accounts Dr. ParticularsKaustubh (₹)Ketan (₹)Pranav (₹)Cr. ParticularsKaustubh (₹)Ketan (₹)Pranav (₹) To Revaluation A/c (loss)4,6004,600–By Balance b/d2,00,0002,80,000– To Balance c/d2,35,4003,15,4002,00,000By Cash A/c (capital)––2,00,000 By Premium for Goodwill A/c40,00040,000– 2,40,0003,20,0002,00,0002,40,0003,20,0002,00,000 (c) Balance Sheet of the new firm as on 1st April 2023 LiabilitiesAmount (₹)AssetsAmount (₹) Capital Accounts:Building1,60,000 Kaustubh2,35,400Machinery1,12,000 Ketan3,15,400Investment48,000 Pranav2,00,000Debtors 52,000 Less: Provision 5,20046,800 Creditors68,000Stock64,000 Bills Payable52,000Cash4,40,000 8,70,8008,70,800 Note: the goodwill premium of ₹ 80,000 brought in cash is first credited to Premium for Goodwill Account and then transferred to the old partners in their sacrifice ratio 1 : 1. Goodwill is not shown in the new Balance Sheet. OR (Retirement...

Dr. Particulars	Sagar (₹)	Suraj (₹)	Sahil (₹)	Cr. Particulars	Sagar (₹)	Suraj (₹)	Sahil (₹)
To Sahil’s Loan A/c	–	–	80,600	By Balance b/d	87,200	70,000	64,000
To Balance c/d	1,03,800	86,600	–	By Reserve Fund A/c	9,000	9,000	9,000
				By Profit and Loss Adjustment A/c	3,600	3,600	3,600
				By Goodwill A/c	4,000	4,000	4,000
	1,03,800	86,600	80,600		1,03,800	86,600	80,600

Kaustubh and Ketan are partners sharing profits and losses in the ratio of 1 : 1. Their Balance Sheet as on 31st March 2023 was as follows:Balance Sheet as on 31st March 2023LiabilitiesAmount (₹)AssetsAmount (₹)Capital Accounts:Building1,20,000Kaustu…

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Liabilities	Amount (₹)	Assets	Amount (₹)
Capital Accounts:		Building	1,20,000
Kaustubh	2,00,000	Machinery	1,40,000
Ketan	2,80,000	Investment	48,000
Creditors	68,000	Debtors	52,000
Bills Payable	52,000	Stock	80,000
		Cash	1,60,000
	6,00,000		6,00,000

Dr. Particulars	Amount (₹)	Cr. Particulars	Amount (₹)
To Provision for Doubtful Debts A/c	5,200	By Building A/c	40,000
To Stock A/c	16,000	By Loss on revaluation transferred to: Kaustubh’s Capital A/c 4,600 Ketan’s Capital A/c 4,600	9,200
To Machinery A/c	28,000

	49,200		49,200

Dr. Particulars	Kaustubh (₹)	Ketan (₹)	Pranav (₹)	Cr. Particulars	Kaustubh (₹)	Ketan (₹)	Pranav (₹)
To Revaluation A/c (loss)	4,600	4,600	–	By Balance b/d	2,00,000	2,80,000	–
To Balance c/d	2,35,400	3,15,400	2,00,000	By Cash A/c (capital)	–	–	2,00,000
				By Premium for Goodwill A/c	40,000	40,000	–
	2,40,000	3,20,000	2,00,000		2,40,000	3,20,000	2,00,000

Dr. Particulars	Amount (₹)	Cr. Particulars	Amount (₹)
To Machinery A/c	1,200	By Building A/c	14,000
To Computer A/c	3,800	By R.D.D. A/c	1,800
To Profit on revaluation transferred to: Sagar’s Capital A/c 3,600 Suraj’s Capital A/c 3,600 Sahil’s Capital A/c 3,600	10,800
	15,800		15,800

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital Accounts:		Building	1,54,000
Sagar	1,03,800	Machinery	18,800
Suraj	86,600	Computer	31,200
Sahil’s Loan A/c	80,600	Goodwill	36,000
Creditors	61,800	Debtors	36,000
		Bank	56,800
	3,32,800		3,32,800