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Standard XII
Accountancy
Revaluation of Assets
PRACTICAL PRO...
Question

PRACTICAL PROBLEM

Minaxi, Ramesh and Poonam were partners sharing profits and losses in the proportion to their capitals, Their Balance sheet of the firm on 31st March, 2012 was as under:

Balance Sheet as on 31st March, 2012
Liabilities
Amount
Rs
Assets
Amount
Rs
Capital
Land and Building
40,000
Minaxi
30,000
Investment
20,000
Ramesh
20,000
Debtors
16,000
Poonam
10,000
Less: R.D.D.
2,000
14,000
Creditors
28,000
Stock
18,000
Reserve
18,000
Cash
14,000
1,06,000
1,06,000

Poonam died on 1st August, 2012 and the following adjustments were made

1) Assets revalued as under-Land & Building Rs 44,000, Investment Rs 18,000, Stock Rs 17,000.

2) All debtors were good.

3) Goodwill of the firm valued at two times the average profits of the last 4 years. No goodwill account to be shown in the books of the firm.

4) Poonam’s share of profit upto her death to be calculated on the basis of average profits of last two year.

5) Profits were Rs 6,000, Rs 12,000, Rs 7,000, Rs 11,000

Prepare:

1) Profits and loss adjustment A/c

2) Balance sheet as on 1st August 2012

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Solution

Profit and Loss Adjustment Account
Dr.
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Investments
2,000
Land and Building
4,000
Stock
1,000
Reserve for Doubtful Debts
2,000
Loss transferred to:
Minaxi
1,500
Ramesh
1,000
Poonam
500
3,000
6,000
6,000

Balance Sheet
as on Aug 01, 2012 after Poonam’s death
Liabilities
Amount
Rs
Assets
Amount
Rs
Creditors
28,000
Land and Building
44,000
Poonam’s Legal Heir’s A/c
17,000
Debtors
16,000
Capital A/cs:
Cash
14,000
Minaxi
38,700
Investments
20,000
Ramesh
25,800
64,500
Less: Amortised
2,000
18,000
Stock
18,000
Less: Depreciation
1,000
17,000
Profit and Loss Suspense A/c
500
1,09,500
1,09,500

Working Notes:

Calculation of Gaining Ratio of Minaxi and Ramesh:


WN1: Distribution of Reserve:

WN2: Share of Profit of Poonam

WN3: Calculation of Share of goodwill of Poonam


WN4: Partners’ Capital Accounts

Partners’ Capital Accounts
Dr.
Cr.
Particulars
Minaxi
Ramesh
Poonam
Particulars
Minaxi
Ramesh
Poonam
Legal Heir’s A/c
17,000
Balance b/d
30,000
20,000
10,000
Goodwill A/c
1,800
1,200
Reserve
9,000
6,000
3,000
Balance c/d
38,700
25,800
Goodwill
3,000
Profit and Loss Suspense A/c
500
Profit and Loss Adjustment A/c (Profit)
1,500
1,000
500
40,500
27,000
17,000
40,500
27,000
17,000

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Q.

PRACTICAL PROBLEM

Sheetal, Anjali, Rajendra were sharing profits and losses as 7:5:4. Their Balance sheet as on 31st March, 2011:

Balance Sheet as on 31st March 2012
Dr.

Cr.
Liabilities
Amount
Rs
Assets
Amount
Rs
Capital
Furniture
17,000
Sheetal
23,000
Machinery
18,000
Anjali
15,000
Building
16,000
Rajendra
12,000
Cash
37,000
Bills Payable
4,000
Creditors
8,000
Loan
10,000
General Reserve
16,000
88,000
88,000

Rajendra died on 30th June 2012 and the following adjustments were agreed as per deed.

1) Furniture, Machinery and Building are to be revalued at Rs 16,700/-, Rs 16,200, to Rs 30,100.

2) Rajendra’s share is goodwill to be valued from firm’s goodwill which was valued at two times the average profit of last three years. Profits of last three years Rs 30,000, Rs 25,000, Rs 20,000/-.

3) His profit upto the date of death is to be calculated on the basis of last years profit.

4) Rajendra was entitled to get a salary of Rs 800/-per month.

5) Interest on capital at 10% be allowed.

6) Rajendra’s drawing upto date of death were Rs 600 p.m.

Prepare:

1) Rajendra’s Capital A/c showing amount payable to his executor

2) Give working of share of goodwill and profit

Q.

PRACTICAL PROBLEMS

Vilas, Mangal, Guru were partners in a business sharing profits and losses in the ratio of 2:1:1 respectively. Their Balance sheet as on 31st March, 2012 was as follows:

Balance Sheet as on 31st March 2012

Dr.

Cr.

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital

Land and Building

6,000

Vilas

6,000

Debtors

5,000

Mangal

7,000

Stock

3,000

Guru

3,400

Cash

6,000

Creditors

2,000

General Reserve

1,600

20,000

20,000

Guru died on 1st July, 2012

1) Land and Building was to be revalued to Rs 7,000 and RDD was to be created of Rs 200.

2) The drawings of Guru upto the date of his death amounted to Rs 1,000/-

3) Charge interest on drawings Rs 100/-

4) His share of goodwill should be calculated at ‘Three’ years purchase of the profits for the last four years which were Rs 15,000, Rs 13,000/-, Rs 7,000, Rs 5,000

5) The deceased partners share of profit upto the date of his death to be calculated on the basis of average profit of last two years.


Prepare:

1) Profit and Loss Adjustment A/c

2) Partners Capital A/cs

3) Balance Sheet of the continuing firm

4) Give working or share of profit and goodwill

Q.

PRACTICAL PROBLEMS

Pannalal, Babulal and Hiralal were partners sharing profits and losses in the proportion of 2:2:1, following is their Balance Sheet as on 31st March, 2008.

Balance Sheet as on 31st March, 2008
Liabilities
Amount
Rs
Assets
Amount
Rs
Capital Accounts:
Machinery
25,000
Pannalal
30,000
Stock
10,000
Babulal
10,000
Debtors
27,500
Hiralal
10,000
Loss: R.D.D.
1,500
26,000
General Reserve
3,000
Investment
12,000
Creditors
20,000
Profit and Loss A/c
9,000
Pannalal’s Loan A/c
4,000
Bank
2,000
Bills payable
7,000
84,000
84,000

On the above date the partners decided to dissolve the firm:

1) Assets were realised: Machinery Rs 22,500, Stock Rs 9,000, Investment Rs 10,500, Debtors Rs 22,500.

2) Dissolution expenses were Rs 1,500.

3) Goodwill of the firm realised Rs 12,000

Pass the necessary Journal entries in the books of the firm.

Q.

PRACTICAL PROBLEMS

Sushil and Sumit were in partnership sharing profits and losses in the proportion of 3/5 and 2/5 respectively. On 31st March, 2005 they decide to dissolve the firm when their Balance Sheet was as under:

Balance Sheet as on 31st March, 2005
Liabilities
Amount
Rs
Assets
Amount
Rs
Sushil’s Capital
20,000
Plant and Machinery
15,000
Sumit’s Capital
18,000
Stock
15,000
General Reserve
5,000
Sundry Debtors
22,000
Sumit’s Loan A/c
2,000
Bank
3,000
Sundry Creditors
10,000
55,000
55,000

The Assets realised as follows: Stock Rs 14,000, Plant and Machinery Rs 12,000 and Debtors Rs 20,000. The Sundry Creditors were paid Rs 9,000 in full settlement.

Prepare: Realisation Account, Partners Capital Accounts and Bank Account.

Q.

PRACTICAL PROBLEM

Vishnu, Prabhakar and Krishna were partners in a business sharing profits and losses in the ratio of 3:1:1 respectively. Their Balance Sheet as on 31st March, 2012 was as follows:

Balance Sheet as on 31st March, 2012
Dr.
Cr.
Liabilities
Amount
Rs
Assets
Amount
Rs
Capital
Plant and Machinery
35,000
Vishnu
40,000
Stock
25,000
Prabhakar
30,000
Debtors
20,000
Krishna
25,000
Cash
30,000
Creditors
5,000
Reserve fund
10,000
1,10,000
1,10,000

Krishna died on 1st October, 2012 and the partnership deed provided that:

1) The deceased partner to be given his share of profit to the date of death on the basis of the profits of the previous year.

2) His share of goodwill will be calculated on two years purchase of average profit of the last 4 years. The net profit for last 4 years were Rs 70,000, Rs 55,000, Rs 45,000, Rs 30,000

3) Plant and Machinery to be valued at Rs 40,000. Reserve for doubtful debts of Rs 2,000 to be created.

4) The drawings of Krishna upto the death amounted to Rs 20,000

5) Interest on capital at 10% p.a. is to be allowed and 6% p.a. to be charged on drawings. Both the interest should be calculated for 6 months.


Prepare:

1) Krishna’s capital A/c and P/L Adjustment A/c

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