At what figures the value of assets and liabilities appear in the books of the firm after revaluation has been done? Show with the help of an imaginary balance sheet.
At what figures the value of assets and liabilities appear in the books of the firm after revaluation has been done? Show with the help of an imaginary balance sheet.
After revaluation has been done, the assets and liabilities appear at their current market values in the Balance Sheet of the reconstituted firm. This can be better explained with the help of the below explained example.
A and B shares profit and loss equally.
Balance Sheet of A and B as on April 01, 2011
Liabilities
Amount
Rs
Assets
Amount
Rs
Sundry Creditors
1,00,000
Cash in Hand
8,000
Capital Accounts
Cash at Bank
28,000
A 75,000
Debtors
40,000
B 75,000
1,50,000
Stock
36,000
Furniture
38,000
Plant and Machinery
1,00,000
2,50,000
2,50,000
1) On that date C is admitted for 1/3rd share and brings 1,00,000 as capital.
2) The value of stock is increased by Rs 7,000.
3) A provision of Rs 2,000 has been created against Debtors.
4) Furniture revalued at Rs 35,000.
5) A machinery costing Rs 50,000 purchased is not recorded in books.
6) Rent outstanding Rs 2,000.
Prepare Revaluation Account, Partners’ Capital Account, Cash Account and Balance Sheet.
Sol:
Revaluation Account
Dr.
Cr.
Particular
Amount
Rs
Particular
Amount
Rs
Rent Outstanding A/c
2,000
Stock
7,000
Provision for Debtors
2,000
Machinery
50,000
Furniture
35,000
Profit transferred:
A’s Capital A/c
25,000
B’s Capital A/c
25,000
50,000
57,000
57,000
A’s Capital Account
Dr.
Cr.
Date
Particular
J.F.
Amount
Rs
Date
Particular
J.F.
Amount
Rs
Balance c/d
1,00,000
Balance b/d
75,000
Revaluation A/c
25,000
1,00,000
1,00,000
B’s Capital Account
Dr.
Cr.
Date
Particular
J.F.
Amount
Rs
Date
Particular
J.F.
Amount
Rs
Balance c/d
1,00,000
Balance b/d
75,000
Revaluation A/c
25,000
1,00,000
1,00,000
C’s Capital Account
Dr.
Cr.
Date
Particular
J.F.
Amount
Rs
Date
Particular
J.F.
Amount
Rs
Balance c/d
1,00,000
Cash A/c
1,00,000
1,00,000
1,00,000
Cash Account
Dr.
Cr.
Date
Particular
J.F.
Amount
Rs
Date
Particular
J.F.
Amount
Rs
Balance b/d
8,000
Balance c/d
1,08,000
C’s Capital A/c
1,00,000
1,08,000
1,08,000
Balance Sheet of A, B & C as at April
Liabilities
Amount
Rs
Assets
Amount
Rs
Sundry Creditors
1,00,000
Cash in hand
1,08,000
Rent Outstanding
2,000
Cash at Bank
28,000
Debtors
40,000
Less: Provision
2,000
38,000
Capital Account
A
1,00,000
Stock
43,000
B
1,00,000
Furniture
35,000
C
1,00,000
3,00,000
Plant and Machinery
1,50,000
4,02,000
4,02,000
After revaluation has been done, the assets and liabilities appear at their current market values in the Balance Sheet of the reconstituted firm. This can be better explained with the help of the below explained example.
A and B shares profit and loss equally.
|
Balance Sheet of A and B as on April 01, 2011
|
|
||||||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
||||
|
Sundry Creditors |
1,00,000 |
Cash in Hand |
8,000 |
||||
|
Capital Accounts |
|
Cash at Bank |
28,000 |
||||
|
A 75,000 |
|
Debtors |
40,000 |
||||
|
B 75,000 |
1,50,000 |
Stock |
36,000 |
||||
|
|
|
|
|
Furniture |
38,000 |
||
|
|
|
|
Plant and Machinery |
1,00,000 |
|||
|
|
2,50,000 |
|
2,50,000 |
||||
|
|
|
|
|
||||
1) On that date C is admitted for 1/3rd share and brings 1,00,000 as capital.
2) The value of stock is increased by Rs 7,000.
3) A provision of Rs 2,000 has been created against Debtors.
4) Furniture revalued at Rs 35,000.
5) A machinery costing Rs 50,000 purchased is not recorded in books.
6) Rent outstanding Rs 2,000.
Prepare Revaluation Account, Partners’ Capital Account, Cash Account and Balance Sheet.
Sol:
|
Revaluation Account |
|||||
|
Dr. |
|
|
Cr. |
||
|
Particular |
Amount Rs |
Particular |
Amount Rs |
||
|
Rent Outstanding A/c |
2,000 |
Stock |
7,000 |
||
| Provision for Debtors | 2,000 | Machinery | 50,000 | ||
| Furniture | 35,000 | ||||
|
Profit transferred: |
|
|
|
||
|
|
A’s Capital A/c |
25,000 |
|
|
|
|
|
B’s Capital A/c |
25,000 |
50,000 |
|
|
|
|
57,000 |
|
57,000 |
||
|
|
|
|
|
||
|
A’s Capital Account |
|||||||
|
Dr. |
|
|
|
|
|
Cr. |
|
|
Date |
Particular |
J.F. |
Amount Rs |
Date |
Particular |
J.F. |
Amount Rs |
|
|
Balance c/d |
|
1,00,000 |
|
Balance b/d |
|
75,000 |
|
|
|
|
|
|
Revaluation A/c |
|
25,000 |
|
|
|
|
1,00,000 |
|
|
|
1,00,000 |
|
|
|
|
|
|
|
|
|
|
B’s Capital Account |
|||||||
|
Dr. |
|
|
|
|
|
|
Cr. |
|
Date |
Particular |
J.F. |
Amount Rs |
Date |
Particular |
J.F. |
Amount Rs |
|
|
Balance c/d |
|
1,00,000 |
|
Balance b/d |
|
75,000 |
|
|
|
|
|
|
Revaluation A/c |
|
25,000 |
|
|
|
|
1,00,000 |
|
|
|
1,00,000 |
|
|
|
|
|
|
|
|
|
|
C’s Capital Account |
|||||||
|
Dr. |
|
|
|
|
|
|
Cr. |
|
Date |
Particular |
J.F. |
Amount Rs |
Date |
Particular |
J.F. |
Amount Rs |
|
|
Balance c/d |
|
1,00,000 |
|
Cash A/c |
|
1,00,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,00,000 |
|
|
|
1,00,000 |
|
|
|
|
|
|
|
|
|
|
Cash Account |
|||||||
|
Dr. |
|
|
|
|
|
|
Cr. |
|
Date |
Particular |
J.F. |
Amount Rs |
Date |
Particular |
J.F. |
Amount Rs |
|
|
Balance b/d |
|
8,000 |
|
Balance c/d |
|
1,08,000 |
|
|
C’s Capital A/c |
|
1,00,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,08,000 |
|
|
|
1,08,000 |
|
|
|
|
|
|
|
|
|
|
Balance Sheet of A, B & C as at April
|
|||||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
||
|
Sundry Creditors |
1,00,000 |
Cash in hand |
1,08,000 |
||
|
Rent Outstanding |
2,000 |
Cash at Bank |
28,000 |
||
|
|
|
Debtors |
40,000 |
|
|
|
|
|
Less: Provision |
2,000 |
38,000 |
|
|
Capital Account |
|
|
|
||
|
A |
1,00,000 |
|
Stock |
43,000 |
|
|
B |
1,00,000 |
|
Furniture |
35,000 |
|
|
C |
1,00,000 |
3,00,000 |
Plant and Machinery |
1,50,000 |
|
|
|
|
|
|
||
|
|
4,02,000 |
|
4,02,000 |
||
|
|
|
|
|
||
