Balance Sheet of X, Y and Z who shared profits in the ratio of 5 : 3 : 2, as on 31st March, 2019 was as follows:

Liabilities and Capital ₹ Assets ₹
Sundry Creditors 39,750 Bank (Minimum Balance) 15,000
Employees' Provident Fund 5,250 Debtors 97,500
Workmen Compensation Reserve 22,500 Stock 82,500
Capital A/cs: Fixed Assets 1,87,500
X 1,65,000
Y 84,000
Z 66,000 3,15,000
3,82,500 3,82,500

Y retired on 1st April, 2019 and it was agreed that:
(i) Goodwill of the firm is valued at ₹ 1,12,500 and Y' s share of it be adjusted into the accounts of X and Z who are going to share future profits in the ratio of 3 : 2.
(ii) Fixed Assets be appreciated by 20%.
(iii) Stock be reduced to ₹ 75,000.
(iv) Y be paid amount brought in by X and Z so as to make their capitals proportionate to their new profit-sharing ratio.
Prepare Revaluation Account, Capital Accounts of all partners and the Balance Sheet of the New Firm.

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Solution

Revaluation Account
Dr.
Cr.
Particulars
Amount
(₹)
Particulars
Amount
(₹)
Stock
7,500
Fixed Assets
37,500
Revaluation Profit

X’s Capital A/c
15,000

Y’s Capital A/c
9,000

Z’s Capital A/c
6,000
30,000

37,500

37,500

Partners’ Capital Accounts
Dr. Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
Y’s Capital A/c
11,250

22,500
Balance b/d
1,65,000
84,000
66,000
Bank

1,33,500
WC Reserve
11,250
6,750
4500
Balance c/d
2,20,500

1,47,000
Revaluation (Profit)
15,000
9,000
6,000

X’s Capital A/c

11,250

Z’s Capital A/c

22,500

Bank A/c
40,500

93,000

2,31,750
1,33,500
1,69,500

2,31,750
1,33,500
1,69,500

Balance Sheet
as on March 31, 2019
Liabilities and Capital
Amount
(₹)
Assets
Amount
(₹)
Sundry Creditors
39,750
Bank
15,000
Employees Provident Fund
5,250
Debtors
97,500
Capitals: Stock
75,000
X
2,20,500
Fixed Assets
2,25,000
Z
1,47,000
72,000

4,12,500

4,12,500

Working Notes:
New Capital = 1,80,000 + 54,000 + 1,33,500 = Rs 3,67,500
X's New Capital = 3,67,500 × 35 = 2,20,500
Z's New Capital = 3,67,500 × 25 = 1,47,500
X brings in Rs 40,500 (2,20,500 – 1,80,000)
Z brings in Rs Rs 93,000 (1,47,500 – 54,00)

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Similar questions

Q. The Balance Sheet of X , Y and Z who shared profits in the ratio of 5 : 3 : 2 , as on 31st March, 2018 was as follows:



Liabilities		₹	Assets	₹
Sundry Creditors		39,750	Bank( Minimum Balance)	15,000
Employees Provident Fund		5,250	Debtors	97,500
Workmen Compensation Reserve		22,500	Stock	82,500
Capital A/cs:			Fixed Assets	1,87,500
X	1,65,000
Y	84,000
Z	66,000	3,15,000
		3,82,500		3,82,500

Y retired on the above date and it was agreed that:
(i) Goodwill of the firm is valued at ₹ 1,12,500 and Y's share of it be adjusted into the accounts of X and Z who are going to share future profits in the ratio of 3 : 2.
(ii) Fixed Assets be appreciated by 20% .
(iii) Stock be reduced to ₹ 75,000.
(iv) Y be paid amount brought in by X and Z in such a way as to make their capitals proportionate to their new profit-sharing ratio.
Prepare Revaluation Account , Capital Accounts of all partners and the Balance Sheet of the New Firm.

Q. The Balance Sheet of X, Y and Z who were sharing profits in the ratio of 5 : 3 : 2 as at 31st March, 2019 is as follows:


Liabilities		₹	Assets	₹
Creditors		50,000	Cash at Bank	40,000
Employees' Provident Fund		10,000	Sundry Debtors	1,00,000
Profit and Loss A/c		85,000	Stock	80,000
Capital A/cs:			Fixed Assets	60,000
X	40,000
Y	62,000
Z	33,000	1,35,000
		2,80,000		2,80,000

X retired on 1st April, 2019 and Y and Z decided to share profits in future in the ratio of 3 : 2 respectively.
The other terms on retirement were:
(a) Goodwill of the firm is to be valued at ₹ 80,000.
(b) Fixed Assets are to be depreciated to ₹ 57,500.
(c) Make a Provision for Doubtful Debts at 5% on Debtors.
(d) A liability for claim, included in Creditors for ₹ 10,000, is settled at ₹ 8,000.
The amount to be paid to X by Y and Z in such a way that their Capitals are proportionate to their profit-sharing ratio and leave a balance of ₹ 15,000 in the Bank Account.
Prepare Profit and Loss Adjustment Account and Partners' Capital Accounts.

Q. X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2 : 1. Their Balance Sheet as at 31st March, 2019 was:


Liabilities		Amount (₹)	Assets	Amount (₹)
Creditors		49,000	Cash	8,000
Reserve		18,500	Debtors	19,000
Capital A/cs: X	82,000		Stock	42,000
Y	60,000		Building	2,07,000
Z	75,500	2,17,500	Patents	9,000
		2,85,000		2,85,000

Y retired on 1st April, 2019 on the following terms:
(a) Goodwill of the firm was valued at ₹ 70,000 and was not to appear in the books.
(b) Bad Debts amounted to ₹ 2,000 were to be written off.
(c) Patents were considered as valueless.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of X and Z after Y's retirement.

Q. X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 1 : 2. On 31st March, 2019, their Balance Sheet was:

Liabilities		Amount (₹)	Assets		Amount (₹)
Bills Payable		12,000	Freehold Premises		40,000
Sundry Creditors		28,000	Machinery		30,000
General Reserve		12,000	Furniture		12,000
Capital A/cs:			Stock		22,000
X	30,000		Sundry Debtors	20,000
Y	20,000		Less: Provision for Doubtful Debts	1,000	19,000
Z	28,000	78,000	Cash		7,000

		1,30,000			1,30,000

Z retired on 1st April, 2019 from the business and the partners agree to the following:
(a) Freehold Premises and Stock are to be appreciated by 20% and 15% respectively.
(b) Machinery and Furniture are to be reduced by 10% and 7% respectively.
(c) Provision for Doubtful Debts is to be increased to ₹ 1,500.
(d) Goodwill of the firm is valued at ₹ 21,000 on Z's retirement.
(e) Continuing partners to adjust their capitals in their new profit-sharing ratio after retirement of Z. Surplus/deficit, if any, in their Capital Accounts will be adjusted through Current Accounts.
Prepare necessary Ledger Accounts and draw the Balance Sheet of the reconstituted firm.

Q. Following is the Balance Sheet of Kusum, Sneh and Usha as on 31st March, 2019, who have agreed to share profits and losses in proportion of their capitals:


Liabilities		₹	Assets		₹
Capital A/cs:			Land and Building		4,00,000
Kusum	4,00,000		Machinery		6,00,000
Sneh	6,00,000		Closing Stock		2,00,000
Usha	4,00,000	14,00,000	Sundry Debtors	2,20,000
Employees' Provident Fund		70,000	Less: Provision for Doubtful Debts	20,000
Workmen Compensation Reserve		30,000	Cash at Bank		2,00,000
Sundry Creditors		1,00,000			2,00,000

		16,00,000			16,00,000

On 1st April, 2019, Kusum retired from the firm and the remaining partners decided to carry on the business. It was agreed to revalue the assets and reassess the liabilities on that date, on the following basis:
(a) Land and Building be appreciated by 30%.
(b) Machinery be depreciated by 30%.
(c) There were Bad Debts of ₹ 35,000.
(d) The claim against Workmen Compensation Reserve was estimated at ₹ 15,000.
(e) Goodwill of the firm was valued at ₹ 2,80,000 and Kusum's share of goodwill was adjusted against the Capital Accounts of the continuing partners Sneh and Usha who have decided to share future profits in the ratio of 3 : 4 respectively.
(f) Capital of the new firm in total will be the same as before the retirement of Kusum and will be in the new profit-sharing ratio of the continuing partners.
(g) Amount due to Kusum be settled by paying ₹ 1,00,000 in cash and balance by transferring to her Loan Account which will be paid later on.
Prepare Revaluation Account, Capital Accounts of Partners and Balance Sheet of the new firm after Kusum's retirement.

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Liabilities and Capital		₹	Assets	₹
Sundry Creditors		39,750	Bank (Minimum Balance)	15,000
Employees' Provident Fund		5,250	Debtors	97,500
Workmen Compensation Reserve		22,500	Stock	82,500
Capital A/cs:			Fixed Assets	1,87,500
X	1,65,000
Y	84,000
Z	66,000	3,15,000
		3,82,500		3,82,500

Revaluation Account
Dr.				Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Stock		7,500	Fixed Assets		37,500
Revaluation Profit
X’s Capital A/c	15,000
Y’s Capital A/c	9,000
Z’s Capital A/c	6,000	30,000

		37,500			37,500

Partners’ Capital Accounts
Dr.								Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
Y’s Capital A/c	11,250		22,500	Balance b/d	1,65,000	84,000	66,000
Bank		1,33,500		WC Reserve	11,250	6,750	4500
Balance c/d	2,20,500		1,47,000	Revaluation (Profit)	15,000	9,000	6,000
				X’s Capital A/c		11,250
				Z’s Capital A/c		22,500
				Bank A/c	40,500		93,000
	2,31,750	1,33,500	1,69,500		2,31,750	1,33,500	1,69,500

Balance Sheet as on March 31, 2019
Liabilities and Capital		Amount (₹)	Assets	Amount (₹)
Sundry Creditors		39,750	Bank	15,000
Employees Provident Fund		5,250	Debtors	97,500
Capitals:			Stock	75,000
X	2,20,500		Fixed Assets	2,25,000
Z	1,47,000	72,000
		4,12,500		4,12,500