Mr. Deepak and Mr. Abhishek were in partnership sharing profits and losses in the proportion of 3 : 1 respectively. Their Balance Sheet as on 31st March 2019 stood as follows:Balance Sheet as on 31st March 2019LiabilitiesAmount (₹)AssetsAmount (₹)Cap…

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Q.2 Mr. Deepak and Mr. Abhishek were in partnership sharing profits and losses in the proportion of 3 : 1 respectively. Their Balance Sheet as on 31st March 2019 stood as follows: Balance Sheet as on 31st March 2019 LiabilitiesAmount (₹)AssetsAmount (₹) Capital Account:Land and Building32,000 Mr. Deepak1,20,000Plant and Machinery60,000 Mr. Abhishek40,000Furniture22,000 General Reserve16,000Stock40,000 Sundry Creditors80,000Sundry Debtors64,000 Bank Overdraft42,000Cash80,000 2,98,0002,98,000 They admitted Adinath into partnership on 1st April 2019 on the terms being that – He shall have to bring in ₹ 40,000 as his capital for 1/5 share in future profits and ₹ 20,000 as his share of goodwill. Furniture to be depreciated by 20%. Stock should be appreciated by 10%. Building should be appreciated by 5%. A provision for 5% R.D.D. to be created on sundry debtors. Capital account of all partners be adjusted in their new profit sharing ratio through cash account. Prepare: (a) Revaluation Account (b) Partners’ Capital Account (c) New Balance Sheet of the firm. OR Given below is a Balance Sheet of Aditya, Ajinkya and Arun who were partners in a firm sharing profits and losses in the ratio 5 : 3 : 2. Their Balance Sheet as on 31st March 2020 was as follows: Balance Sheet as on 31st March 2020 LiabilitiesAmount (₹)AssetsAmount (₹) Creditors10,450Cash3,800 Reserve Fund7,500Debtors9,000 Capital Account:Stock8,750 Aditya21,000Machinery50,000 Ajinkya18,500Furniture2,500 Arun16,600 74,05074,050 On 1st April 2020 Arun retired on the following terms – Goodwill of the firm will be raised in the books at ₹ 10,000. Stocks to be reduced by 10%, furniture by 5% and Machinery by 10%. R.B.D.D. be maintained at 5% on debtors. ₹ 100 to be written off from creditors. All the amount due to Arun 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 ₹ 2,000 (Deepak ₹ 1,500, Abhishek ₹ 500); Deepak withdraws ₹ 25,500 and Abhishek ₹ 8,500; new Balance Sheet total ₹ 3,22,000. OR: P&L Adjustment loss ₹ 6,350; Arun’s loan ₹ 18,830; new Balance Sheet total ₹ 77,600. Working notes Furniture: 20% of ₹ 22,000 = ₹ 4,400 (decrease). R.D.D.: 5% of ₹ 64,000 = ₹ 3,200. Stock: 10% of ₹ 40,000 = ₹ 4,000 (increase). Building: 5% of ₹ 32,000 = ₹ 1,600 (increase). Goodwill ₹ 20,000 brought by Adinath: no new ratio is given, so Deepak and Abhishek share the remaining 4/5 in their old ratio 3 : 1 and the sacrifice ratio equals the old ratio 3 : 1. Deepak ₹ 15,000, Abhishek ₹ 5,000. General Reserve ₹ 16,000 in 3 : 1: Deepak ₹ 12,000, Abhishek ₹ 4,000. New ratio: Deepak 3/4 × 4/5 = 3/5, Abhishek 1/4 × 4/5 = 1/5, Adinath 1/5, i.e. 3 : 1 : 1. Adinath’s capital ₹ 40,000 for 1/5 share, so total capital of the firm = ₹ 40,000 × 5 = ₹ 2,00,000. Deepak 3/5 = ₹ 1,20,000; Abhishek 1/5 = ₹ 40,000. Excess withdrawn in cash: Deepak ₹ 1,45,500 – ₹ 1,20,000 = ₹ 25,500; Abhishek ₹ 48,500 – ₹ 40,000 = ₹ 8,500. Cash: ₹ 80,000 + ₹ 40,000 + ₹ 20,000 – ₹ 25,500 – ₹ 8,500 = ₹ 1,06,000. (a) Revaluation Account Dr. ParticularsAmount (₹)Cr. ParticularsAmount (₹) To Furniture A/c4,400By Stock A/c4,000 To Provision for R.D.D. A/c3,200By Land and Building A/c1,600 By Loss transferred to: Deepak’s Capital A/c 1,500 Abhishek’s Capital A/c 5002,000 7,6007,600 (b) Partners’ Capital Account Dr. ParticularsDeepak (₹)Abhishek (₹)Adinath (₹)Cr. ParticularsDeepak (₹)Abhishek (₹)Adinath (₹) To Revaluation A/c (loss)1,500500–By Balance b/d1,20,00040,000– To Cash A/c (excess withdrawn)25,5008,500–By General Reserve A/c12,0004,000– To Balance c/d1,20,00040,00040,000By Cash A/c (goodwill)15,0005,000– By Cash A/c (capital)––40,000 1,47,00049,00040,0001,47,00049,00040,000 (c) Balance Sheet of the new firm as on 1st April 2019 LiabilitiesAmount (₹)AssetsAmount (₹) Capital Accounts:Land and Building 32,000 Add: Appreciation 1,60033,600 Deepak1,20,000Pla...

Dr. Particulars	Aditya (₹)	Ajinkya (₹)	Arun (₹)	Cr. Particulars	Aditya (₹)	Ajinkya (₹)	Arun (₹)
To P&L Adjustment A/c (loss)	3,175	1,905	1,270	By Balance b/d	21,000	18,500	16,600
To Arun’s Loan A/c	–	–	18,830	By Reserve Fund A/c	3,750	2,250	1,500
To Balance c/d	26,575	21,845	–	By Goodwill A/c	5,000	3,000	2,000
	29,750	23,750	20,100		29,750	23,750	20,100

Mr. Deepak and Mr. Abhishek were in partnership sharing profits and losses in the proportion of 3 : 1 respectively. Their Balance Sheet as on 31st March 2019 stood as follows:Balance Sheet as on 31st March 2019LiabilitiesAmount (₹)AssetsAmount (₹)Cap…

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Liabilities	Amount (₹)	Assets	Amount (₹)
Capital Account:		Land and Building	32,000
Mr. Deepak	1,20,000	Plant and Machinery	60,000
Mr. Abhishek	40,000	Furniture	22,000
General Reserve	16,000	Stock	40,000
Sundry Creditors	80,000	Sundry Debtors	64,000
Bank Overdraft	42,000	Cash	80,000
	2,98,000		2,98,000

Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	10,450	Cash	3,800
Reserve Fund	7,500	Debtors	9,000
Capital Account:		Stock	8,750
Aditya	21,000	Machinery	50,000
Ajinkya	18,500	Furniture	2,500
Arun	16,600
	74,050		74,050

Dr. Particulars	Amount (₹)	Cr. Particulars	Amount (₹)
To Furniture A/c	4,400	By Stock A/c	4,000
To Provision for R.D.D. A/c	3,200	By Land and Building A/c	1,600
		By Loss transferred to: Deepak’s Capital A/c 1,500 Abhishek’s Capital A/c 500	2,000
	7,600		7,600

Dr. Particulars	Deepak (₹)	Abhishek (₹)	Adinath (₹)	Cr. Particulars	Deepak (₹)	Abhishek (₹)	Adinath (₹)
To Revaluation A/c (loss)	1,500	500	–	By Balance b/d	1,20,000	40,000	–
To Cash A/c (excess withdrawn)	25,500	8,500	–	By General Reserve A/c	12,000	4,000	–
To Balance c/d	1,20,000	40,000	40,000	By Cash A/c (goodwill)	15,000	5,000	–
				By Cash A/c (capital)	–	–	40,000
	1,47,000	49,000	40,000		1,47,000	49,000	40,000

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital Accounts:		Land and Building 32,000 Add: Appreciation 1,600	33,600
Deepak	1,20,000	Plant and Machinery	60,000
Abhishek	40,000	Furniture 22,000 Less: Depreciation 4,400	17,600
Adinath	40,000	Stock 40,000 Add: Appreciation 4,000	44,000
Sundry Creditors	80,000	Sundry Debtors 64,000 Less: R.D.D. 3,200	60,800
Bank Overdraft	42,000	Cash	1,06,000
	3,22,000		3,22,000

Dr. Particulars	Amount (₹)	Cr. Particulars	Amount (₹)
To Stock A/c	875	By Creditors A/c	100
To Furniture A/c	125	By Loss transferred to: Aditya’s Capital A/c 3,175 Ajinkya’s Capital A/c 1,905 Arun’s Capital A/c 1,270	6,350
To Machinery A/c	5,000
To R.B.D.D. A/c	450
	6,450		6,450

Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors 10,450 Less: Written off 100	10,350	Goodwill	10,000
Arun’s Loan A/c	18,830	Cash	3,800
Capital Accounts:		Debtors 9,000 Less: R.B.D.D. 450	8,550
Aditya	26,575	Stock 8,750 Less: 10% 875	7,875
Ajinkya	21,845	Machinery 50,000 Less: 10% 5,000	45,000
		Furniture 2,500 Less: 5% 125	2,375
	77,600		77,600