Question

$X$ and $Y$ are partners in a firm sharing profits in the ratio of $3:2$. They admitted $Z$ as a new partner for $1/4^{th}$ share. At the time of admission of $Z$, Stock (Book Value $Rs.1,00,000$) is to be reduced by $40\%$ and Furniture (Book Value $Rs.60,000$) is to be reduced to $40\%$. Pass the necessary Journal entries.

Answer 1

(i) Revaluation a/c... Dr. 76000

To Stock a/c 40000

To Furniture a/c 36000

(Being stock and furniture revalued)

(ii) X's Capital a/c... Dr. 45600

Y's Capital a/c.... Dr. 30400

To Revaluation a/c 7600

(Being loss on revaluation distributed among the partners in the ratio of 3:2)