At the time of admission of a partner C, assets and liabilities of A and B were revalued as follows:
(a) A Provision for Doubtful Debts @10% was made on Sundry Debtors (Sundry Debtors ₹ 50,000).
(b) Creditors were written back by ₹ 5,000.
(c) Building was appreciated by 20% (Book Value of Building ₹ 2,00,000).
(d) Unrecorded Investments were valued at ₹ 15,000.
(e) A Provision of ₹ 2,000 was made for an Outstanding Bill for repairs.
(f) Unrecorded Liability towards suppliers was ₹ 3,000.
Pass necessary Journal entries.

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Solution

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Creditors A/c

Dr.

5,000

Building A/c

Dr.

40,000

Investments A/c

Dr.

15,000

To Revaluation A/c

60,000

(Increase in assets and decrease in liabilities
transferred to Revaluation Account)

Revaluation A/c

Dr.

10,000

To Provision for Doubtful Debts A/c

5,000

To Reserve for outstanding Repairs Bill A/c

2,000

To Creditors A/c

3,000

(Increase in liabilities, decrease in assets and creation of reserves and provisions transferred to Revaluation Account)

Revaluation A/c

Dr.

50,000

To Old Partners’ Capital A/c

50,000

(Profit on Revaluation transferred to Partners’ Capital)

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Similar questions

Q. At the time of admission of new partner

C

, the assets and liabilities of

A

and

B

were revalued as follows:
(a) A provision for Doubtful Debts @

10 %

was made on Sundry Debtors (Sundry Debtors

R s . 50, 000

).
(b) Creditors were written back by

R s . 5000

.
(c) Building was appreciated by

20 %

(Book value of Building

R s . 2, 00, 000

).
(d) Unrecorded Investment were worth

R s . 15, 000

.
(e) A Provision of

R s . 2, 000

was made for an Outstanding Bill for repairs.
(f) Unrecorded Liability towards suppliers was

R s . 3, 000

.
Pass necessary Journal entries:

A and B are partners sharing profits in the ratio of 2:1. C is admitted as a new partner and the new ratio is decided as 5:3:2. The assets and liabilities are revalued as:

(i) Building was appreciated by 25% (Book value of Building Rs 4,00,000).

(ii)The provision for doubtful debts was reduced from Rs 5,000 to Rs 3,000.

(iii) A provision for Rs 4,000 was to be made for an outstanding bill for repairs.

(iv) Unrecorded investments were worth Rs 10,000

(v) Unrecorded liability towards suppliers was Rs 12,000

Pass the necessary journal entries.

Q. A, B and C are partners sharing profits and losses in the ratio of 5 : 3 : 2 . Their Balance Sheet as at 31st March, 2017 stood as follows:


Liabilities		₹	Assets	₹
Capital A/cs:			Land and Building	3,50,000
A	2,50,000		Machinery	2,40,000
B	2,50,000		Computers	70,000
C	2,00,000	7,00,000	Investments(Market value ₹ 90,000)	1,00,000
General Reserve		60,000	Sundry Debtors	50,000
Investments Fluctuation Reserve		30,000	Cash in Hand	10,000
Sundry Creditors		90,000	Advertisement Suspense	5,000

		8,80,000		8,80,000

They decided to share profits equally w.e.f. 1st April, 2017. They also agreed that:
(i) Value of Land and Building be decreased by 5% .
(ii) Value of Machinery be increased. by 5%.
(iii) A Provision for Doubtful Debts be created @ 5% on Sundry Debtors.
(iv) A Motor Cycle valued at ₹ 20,000 was unrecorded and is now to be recorded in the books.
(v) Out of Sundry Creditors, ₹ 10,000 is not payable.
(vi) Goodwill is to be valued at 2 years' purchase of last 3 years profits . Profits being for 2016-17

—

₹ 50,000 (Loss); 2015-16

—

₹2,50,000 and 2014-15

—

₹ 2,50,000.
(vii) C was to carry out the work for reconstituting the firm at a remuneration ( including expenses) of ₹ 5,000. Expenses came to ₹ 3,000.
Pass journal entries and prepare Revaluation Account.

Q. Pass entries in firm's Journal for the following on admission of a partner:
(i) Unrecorded Investments worth ₹ 20,000.
(ii) Unrecorded liability towards suppliers for ₹ 5,000.
(iii) An item of ₹ 1,600 included in Sundry Creditors is not likely to be claimed and hence should be written back.

Q. Pass entries in the firm's journal for the following on admission of a partner:
(i) Machinery be reduced by ₹ 16,000 and Building be appreciated by ₹ 40,000.
(ii) A provision be created for Doubtful Debts @ 5% of Debtors amounting to ₹ 80,000.
(iii) Provision for warranty claims be increased by ₹ 12,000.

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Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

	Creditors A/c	Dr.		5,000
	Building A/c	Dr.		40,000
	Investments A/c	Dr.		15,000
	To Revaluation A/c				60,000
	(Increase in assets and decrease in liabilities transferred to Revaluation Account)

	Revaluation A/c	Dr.		10,000
	To Provision for Doubtful Debts A/c				5,000
	To Reserve for outstanding Repairs Bill A/c				2,000
	To Creditors A/c				3,000
	(Increase in liabilities, decrease in assets and creation of reserves and provisions transferred to Revaluation Account)

	Revaluation A/c	Dr.		50,000
	To Old Partners’ Capital A/c				50,000
	(Profit on Revaluation transferred to Partners’ Capital)