Question

X and Y are partners sharing profits equally. Their Balance Sheet as on 31st March, 2019 is given below:

Liabilities		Amount (₹)	Assets		Amount (₹)
Capital A/cs:			Land and Building		1,50,000
X	1,50,000		Plant and Machinery		1,00,000
Y	1,00,000	2,50,000	Furniture and Fittings		25,000
Current A/cs:			Stock		75,000
X	40,000		Debtors	75,000
Y	30,000	70,000	Less: Provision for Doubtful Debts	5,000	70,000
Creditors		1,30,000	Bills Receivable		30,000
Bills Payable		50,000	Bank		50,000
		5,00,000			5,00,000

Z is admitted as a new partner for 1/4th share under the following terms:
(a) Z is to introduce ₹ 1,25,000 as capital.
(b) Goodwill of the firm was valued at nil.
(c) It is found that the creditors included a sum of ₹ 7,500 which was not to be paid. But it was also found that there was a liability for Compensation to Workmen amounting to ₹ 10,000.
(d) Provision for doubtful debts is to be created @ 10% on debtors.
(e) In regard to the Partners' Capital Accounts, present Fixed Capital Account Method is to be converted into Fluctuating Capital Account Method.
(f) Bills of ₹ 20,000 accepted from creditors were not recorded in the books.
(g) X provides ₹ 50,000 loan to the business carrying interest @ 10% p.a.
You are required to prepare Revaluation Account, Partners' Capital Accounts, Bank Account and the Balance Sheet of the new firm.

Answer 1

Revaluation Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Reserve for D. Debts	2,500	Creditors	7,500
Liability for WCF	10,000	Loss transferred to
		X’s Current A/c	2,500
		Y’s Current A/c	2,500
	12,500		12,500

Partners’ Current Accounts
Dr.	Cr.
Particulars	X	Y	Particulars	X	Y
Revaluation A/c	2,500	2,500	Balance b/d	40,000	30,000
Balance c/d	37,500	27,500
	40,000	30,000		40,000	30,000

Partners’ Capital Accounts
Dr.									Cr.
Particulars		X	Y	Z	Particulars	X	Y	Z
					Balance b/d	1,50,000	1,00,000
					Current A/c	37,500	27,500
Balance c/d		1,87,500	1,27,500	1,25,000	Bank			1,25,000
		1,87,500	1,27,500	1,25,000		1,87,500	1,27,500	1,25,000

Balance Sheet as on 1st April, 2019
Liabilities		Amount (₹)	Assets		Amount (₹)
Creditors (1,30,000 – 7,500 – 20,000)		1,02,500	Land and Building		1,50,000
Bills Payable (50,000 + 20,000)		70,000	Plant and Machinery		1,00,000
Capital A/cs:			Fixture and Fittings		25,000
X	1,87,500		Stock		75,000
Y	1,27,500		Bills Receivables		30,000
Z	1,25,000	4,40,000	Bank (50,000 + 1,25,000 + 50,000)		2,25,000
X's Loan		50,000	Debtors	75,000
Liability for WCF		10,000	Less: 10% Reserve for D. Debts	7,500	67,500
		6,72,500			6,72,500