CameraIcon
CameraIcon
SearchIcon
MyQuestionIcon


Question

$$A, B$$ 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 $$Rs. 70,000$$; Building $$Rs. 1,00,000$$; Plant and Machinery $$Rs. 40,000$$; Stock of Raw Materials $$Rs. 20,000$$ Stock of Finished Goods $$Rs. 30,000$$ and debtors $$Rs. 20,000$$.
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 $$Rs. 18,000$$ and finished Goods at $$Rs. 35,000$$
(e) An Old Computer previously written off was sold for $$Rs. 2,000$$ as scrap.
(f) Firm had to pay $$Rs. 5,000$$ to an injured employee.
Pass necessary Journal entries to record the above adjustments and prepare the Revaluation Account.


Solution

Revaluation Account

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)

 

 

 


Accountancy

Suggest Corrections
thumbs-up
 
0


similar_icon
Similar questions
View More


similar_icon
People also searched for
View More



footer-image