$A, B$ and $C$ were partners, sharing profits and losses in the ratio of $2 : 2 : 1$ . $B$ decides to retire on 31st March, 2018. On the date of his retirement, some of the assets and liabilities appeared in the books as follows:
Creditors $R s . 70, 000$ ; Building $R s . 1, 00, 000$ ; Plant and Machinery $R s . 40, 000$ ; Stock of Raw Materials $R s . 20, 000$ Stock of Finished Goods $R s . 30, 000$ and debtors $R s . 20, 000$ .
The following was agreed among the partners on B's retirement:
(a) Building to be appreciated by $20 %$ .
(b) Plant and Machinery to be depreciated by $10 %$
(c) A provision of $5 %$ on Debtors to be created for Doubtful Debt.
(d) Stock of Raw Material to be valued at $R s . 18, 000$ and finished Goods at $R s . 35, 000$
(e) An Old Computer previously written off was sold for $R s . 2, 000$ as scrap.
(f) Firm had to pay $R s . 5, 000$ to an injured employee.
Pass necessary Journal entries to record the above adjustments and prepare the Revaluation Account.

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Solution

Revaluation Account

Dr.

Cr.

Particulars

Rs.

Particulars

Rs.

To Plant and Machinery A/c (40,00010%)

4,000

By Building A/c (1,00,00020%)

20,000

To Provision for Doubtful Debts

1,000

By Stock of Finished Goods A/c

5,000

To Stock of Raw Materials A/c

2,000

By Computer A/c

2,000

To Workmen’s Compensation A/c

5,000

To Profit transferred to:

A’s Capital A/c

6,000

B’s Capital A/c

6,000

C’s Capital A/c

3,000

15,000

27,000

27,000

Date

Particulars

L.F.

Debit

Credit

Building A/c Dr.

20,000

Stock of Finished Goods A/c Dr.

5,000

Computer A/c Dr.

2,000

To Revaluation A/c

27,000

(Being increase in value of assets and decrease in value of liabilty is transferred to Revaluation Account)

Revaluation A/c Dr.

12,000

To Plant and Machinery A/c

4,000

To Provision for Doubtful Debts A/c

1,000

To Stock of Raw Material A/c

2,000

To Workmen’s Compensation A/c

5,000

(Being decrease in value of assets and increase in value of liability is transferred to Revaluation Account)

Revaluation A/c Dr.

15,000

To A’s Capital A/c

6,000

To B’s Capital A/c

6,000

To C’s Capital A/c

3,000

(Being Revaluation profit transferred to Partner’s Capital A/c)

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Q. A , B and C were partners , sharing profits and losses in the ratio of 2 : 2 : 1 . B decides to retire on 31st March, 2018. On the date of his retirement , some of the assets and liabilities appeared in the books as follows: Creditors ₹ 70,000; Building ₹ 1,00,000; Plant and Machinery ₹ 40,000; Stock of Raw Material;s ₹ 20,000; Stock of Finished Goods ₹ 30,000 and Debtors ₹ 20,000.
The following was agreed among the partners on B's retirement:
(a) Building to be appreciated by 20%.
(b) Plant and Machinery to be depreciated by 10%.
(c) A Provision of 5% on Debtors to be created for Doubtful Debts .
(d) Stock of Raw Materials too be valued at ₹ 18,000 and Finished Goods at ₹ 35,000.
(e) An Old Computer previously written off was sold for ₹ 2,000 as scrap.
(f) Firm had to pay ₹ 5,000 to an injured employee.
Pass necessary journal entries to record the above adjustments and prepare the Revaluation Account.

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Creditors ₹ 70,000; Building ₹ 1,00,000; Plant and Machinery ₹ 40,000; Stock of Raw Materials ₹ 20,000; Stock of Finished Goods ₹ 30,000 and Debtors ₹ 20,000.
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(b) Plant and Machinery to be reduced by 10%.
(c) A Provision of 5% on Debtors to be created for Doubtful Debts.
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The following was agreed upon between the partners on Naman’s retirement:

(i)	Building to be appreciated by 20%.
(ii)	Plant and Machinery to be depreciated by 10%.
(iii)	A provision of 5% on debtors to be created for bad and doubtful debts.
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(i) Building to be appreciated by 20 %.

(ii) Plant and Machinery to be depreciated by 10 %.

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X, Y

and

Z

are partners sharing profit and losses in the ratio of

5 : 3 : 2

Z

retires, and on the date of his retirement, the following adjustments were agreed upon:
(a) The value of Furniture is to be increased by

R s . 12, 000

.
(b) The value of stock to be decreased by

R s . 10, 000

R s . 50, 000

is to be depreciated by

10 %

(d) A Provision for Doubtful Debts @ 5% is to be created on debtors of book value of

R s . 40, 000

.
(e) Unrecorded investment worth

R s .10, 000

.
(f) An item of

R s . 1, 000

included in bills payable is not likely to be claimed, hence should be written back.
Pass necessary Journal entries.

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Dr.				Cr.
Particulars		Rs.	Particulars	Rs.
To Plant and Machinery A/c (40,000*10%)		4,000	By Building A/c (1,00,000*20%)	20,000
To Provision for Doubtful Debts		1,000	By Stock of Finished Goods A/c	5,000
To Stock of Raw Materials A/c		2,000	By Computer A/c	2,000
To Workmen’s Compensation A/c		5,000
To Profit transferred to:
A’s Capital A/c	6,000
B’s Capital A/c	6,000
C’s Capital A/c	3,000	15,000
		27,000		27,000

Date	Particulars	L.F.	Debit	Credit
	Building A/c Dr.		20,000
	Stock of Finished Goods A/c Dr.		5,000
	Computer A/c Dr.		2,000
	To Revaluation A/c			27,000
	(Being increase in value of assets and decrease in value of liabilty is transferred to Revaluation Account)

	Revaluation A/c Dr.		12,000
	To Plant and Machinery A/c			4,000
	To Provision for Doubtful Debts A/c			1,000
	To Stock of Raw Material A/c			2,000
	To Workmen’s Compensation A/c			5,000
	(Being decrease in value of assets and increase in value of liability is transferred to Revaluation Account)

	Revaluation A/c Dr.		15,000
	To A’s Capital A/c			6,000
	To B’s Capital A/c			6,000
	To C’s Capital A/c			3,000
	(Being Revaluation profit transferred to Partner’s Capital A/c)