MyQuestionIcon

1

You visited us 1 times! Enjoying our articles? Unlock Full Access!

Introduction to Retirement

Advertisement...

Question

Advertisement expenses written off by 25%. What will be it's treatment in revaluation and partner's capital account?

Open in App

Solution

Dear Student,
When we write off any expense, it is decrease in liability which is to be credited in the revaluation account. The same would result in the profit on revaluation which is to distributed among old partner's in old ratio (Credit side of Partner's Capital A/c). Same in the case of advertisement expenses written off.

Regards,

Suggest Corrections

thumbs-up

0

Similar questions

Q. On retirement of a partner, goodwill appears in the balance sheet , it will be written-off by debiting the capital accounts of partners.

Q. Following is the Balance Sheet of X, Y and Z as at 31st March, 2019. They shared profits in the ratio of 3 : 3 : 2:

Liabilities		Amount (₹)	Assets		Amount (₹)
Sundry Creditors		2,50,000	Cash at Bank		50,000
General Reserve		80,000	Bills Receivable		60,000
Partners' Loan A/cs:			Debtors	80,000
X		50,000	Less: Provision for Doubtful Debts	4,000	76,000
Y		40,000	Stock		1,24,000
Capital A/cs:			Fixed Assets		3,00,000
X	1,00,000		Advertisement Suspense A/c		16,000
Y	60,000		Profit and Loss A/c		4,000
Z	50,000	2,10,000

		6,30,000			6,30,000

On 1st April, 2019, Y decided to retire from the firm on the following terms:
(a) Stock to be reduced by ₹ 12,000.
(b) Advertisement Suspense Account to be written off.
(c) Provision for Doubtful Debts to be increased to ₹ 6,000.
(d) Fixed Assets be appreciated by 10%.
(e) Goodwill of the firm, valued at ₹ 80,000 and the amount due to the retiring partners be adjusted in X's and Z's Capital Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet to give effect to the above.

Q. Following is the Balance Sheet of Abha and Binay as at 31st March, 2014:


Liabilities		₹	Assets		₹
Creditors		13,000	Bank		15,000
Employees Provident Fund		8,000	Debtors	22,000
Workmen Compensation Fund		15,000	Less : Provision for Doubtful Debts	1,000	21,000
Capital A/cs:			Stock		10,000
Abha	55,000		Plant and Machinery		60,000
Binay	30,000	85,000	Goodwill		10,000
			Profit and Loss		5,000


		1,21,000			1,21,000

Chitra was admitted as a partner for 1/4th share in the profits of the firm. It was decided that:
(a) Bad Debts amounted to ₹ 1,500 will be written off.
(b) Stock worth ₹ 8,000 was taken over by Abha and Binay at Book Value in their profit-sharing ratio. The remaining stock was valued at ₹ 2,500.
(c) Plant and Machinery and Goodwill were valued at ₹ 32,000 and ₹ 20,000 respectively.
(d) Chitra brought her share of goodwill in cash.
(e) Chitra will bring proportionate capital and the capitals of Abha and Binay will be adjusted in their profit-sharing ratio by bringing in or paying off cash as the case may be.
Prepare Revaluation Account and Partners' Capital Accounts.

Q. 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.

Goodwill is written off by debiting all the partners’ capital account in the ___

View More

Join BYJU'S Learning Program

similar_icon

Related Videos

lock

Time for Retirement

ACCOUNTANCY

Watch in App

explore_more_icon

Explore more

Introduction to Retirement

Standard XII Accountancy

Join BYJU'S Learning Program

CrossIcon