Question

Ashish , Aakash and Amit are partners sharing profits and losses equally. The Balance Sheet as at 31st March, 2018 was as follows:

Liabilities		₹	Assets	₹
Sundry Creditors		75,000	Cash in Hand	24,000
General Reserve		90,000	Cash at Bank	1,40,000
Capital A/cs:			Sundry Debtors	80,000
Ashish	3,00,000		Stock	1,40,000
Aakash	3,00,000		Land and Building	4,00,000
Amit	2,75,000	8,75,000	Machinery	2,50,000
			Advertisement Suspense	6,000
		10,40,000		10,40,000

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The partners decided to share profits in the ratio of 2 ; 2 : 1 w.e.f . 1st April, 2018. They also decided that:
(i) Value of stock to be reduced to ₹ 1,25,000.
(ii) Value of machinery to be decreased by 10%.
(iii) Land and Building to be appreciated by ₹ 62,000.
(iv) Provision for Doubtful Debts to be made @ 5% on Sundry Debtors.
(v) Aakash was to carry out reconstitution of the firm at a remuneration of ₹ 10,000.
Pass necessary journal entries to give effect to the above.

Answer 1

Journal
Date 2018	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
April 1	General Reserve A/c	Dr.		90,000
	To Ashish’s Capital A/c				30,000
	To Akash’s Capital A/c				30,000
	To Amit’s Capital A/c				30,000
	(Reserve distributed)
April 1	Ashish’s Capital A/c	Dr.		2,000
	Akash’s Capital A/c	Dr.		2,000
	Amit’s Capital A/c	Dr.		2,000
	To Advertisement Suspense A/c				6,000
	(Advertisement Suspense distributed)
April 1	Revaluation A/c	Dr.		54,000
	To Stock A/c				15,000
	To Machinery A/c				25,000
	To Provision for Doubtful Debts A/c				4,000
	To Akash’s Capital A/c (Remuneration)				10,000
	(Assets revalued)
April 1	Land & Building A/c	Dr.		62,000
	To Revaluation A/c				62,000
	(Assets revalued)
April 1	Revaluation A/c	Dr.		8,000
	To Ashish’s Capital A/c				2,666
	To Akash’s Capital A/c				2,666
	To Amit’s Capital A/c				2,667
	(Profit made)