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, 2019 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 partner on 1st April, 2019 for equal share. His capital is to be ₹ 50,000.
Following adjustments are agreed on D's admission:
(a) Out of the Creditors, a sum of ₹ 10,000 is due to D, it will be adjusted against his capital.
(b) Advertisement Expenses of ₹ 1,200 are to be carried forward 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 bank, was dishonoured on 31st March, 2019 but entry was not passed for dishonour.
(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 (₹)	Particulars			Amount (₹)
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 01,2019 after D’s admission
Liabilities			Amount (₹)	Assets		Amount (₹)
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

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