Question

A , B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1 respectively. Their Balance Sheet as at 31st March , 2108 is as follows:

Liabilities		₹	Assets	₹
Capital A/cs:			Land and Building	50,000
A	60,000		Plant and Machinery	40,000
B	60,000		Furniture	30,000
C	40,000	1,60,000	Stock	20,000
Creditors		30,000	Debtors	30,000
Bills Payable		10,000	Bills Receivable	20,000
			Bank	10,000
		2,00,000		2,00,000

D is admitted as a new partner on 1st April, 2018 for an equal share and is to pay ₹ 50,000 as capital .
Following are the adjustments required on D's admission :
(a) Out of the Creditors , a sum of ₹ 10,000 is due to D which will be transferred to his capital Account.
(b) Advertisement Expenses of ₹ 1,200 are to be carried forward to next accounting period as Prepaid Expenses.
(c) Expenses debited in the Profit and Loss Account includes a sum of ₹ 2,000 paid for B's personal expenses.
(d) A Bill of Exchange of ₹ 4,000, which was previously discounted with the banker, was dishonoured on 31st March, 2018 but no entry has been passed for that .
(e) A Provision for Doubtful Debts @ 5% is to be created against Debtors .
(f) Expenses on Revaluation amounted to ₹ 2,100 is paid by A .
Prepare necessary Ledger Accounts and Balance Sheet after D's admission.

Answer 1

Revaluation Account
Dr.			Cr.
Particulars	Amount Rs	Particulars			Amount Rs
Provision for doubtful Debts	1,700	Prepaid Advt. Expense			1,200
A’s Capital (Rev. Exp.)	2,100	B’s Capital (Personal Exp.)			2,000
		Loss transferred to
		A Capital		300
		B Capital		200
		C Capital		100	600
	3,800				3,800

Partners’ Capital Accounts
Dr.					Cr.
Particulars	A	B	C	D	Particulars	A	B	C	D
Revaluation		2,000			Balance b/d	60,000	60,000	40,000
(Personal Exp.)					Creditors				10,000
Revaluation (Loss)	300	200	100		Cash				40,000
Balance c/d	61,800	57,800	39,900	50,000	Revaluation (Exp.)	2,100
	62,100	60,000	40,000	50,000		62,100	60,000	40,000	50,000

Balance Sheet as on April 01,2018 after D’s admission
Liabilities			Amount Rs	Assets		Amount Rs
Capital Accounts:				Land and Building		50,000
A	61,800			Plant and Machinery		40,000
B	57,800			Furniture		30,000
C	39,900			Prepaid Advt. Expenses		1,200
D	50,000		2,09,500	Stock		20,000
				Debtors	30,000
Creditors	30,000			Add: B/R dishonor	4,000
Less: D’s Capital		10,000	20,000	Less: 5% Provision for D Debts	(1,700)	32,300
Bill Payable			10,000
				Bills Receivable		20,000
				Bank (10,000 + 40,000 - 4,000)		46,000
			2,39,500			2,39,500

WN1: Distribution of Loss on Revaluation

$$\begin{gathered} \mathrm{A}\text{'}\mathrm{s}\mathrm{Capital}\mathrm{will}\mathrm{be}\mathrm{debited}\mathrm{by}=600\times \frac{3}{6}=\mathrm{Rs}300 \\ \mathrm{B}\text{'}\mathrm{s}\mathrm{Capital}\mathrm{will}\mathrm{be}\mathrm{debited}\mathrm{by}=600\times \frac{2}{6}=\mathrm{Rs}200 \\ \mathrm{C}\text{'}\mathrm{s}\mathrm{Capital}\mathrm{will}\mathrm{be}\mathrm{debited}\mathrm{by}=600\times \frac{1}{6}=\mathrm{Rs}100 \end{gathered}$$