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Accountancy · 2024 · 6 marks
Reconstitution of a Partnership Firm – Retirement/Death of a PartnerAdjustment for Revaluation of Assets and Liabilities6 markslong answer
CBSE 2024 · Region 5 · Set 1 · Q24
Arnav, Bhavi and Chavi were in partnership sharing profits and losses in the ratio of 3: 2: 1. On 31st March, 2023, their Balance Sheet was as…
Arnav, Bhavi and Chavi were in partnership sharing profits and losses in the ratio of $\displaystyle 3$ : $\displaystyle 2$ : 1. On 31st March, $\displaystyle 2023$, their Balance Sheet was as follows : Balance Sheet ofArnav, Bhavi and Chavi as at 31st March, $\displaystyle 2023$
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capitals : | Plant & Machinery | $\displaystyle 3,00,000$ | |
| Arnav $\displaystyle 1,80,000$ | Furniture | $\displaystyle 20,000$ | |
| Bhavi $\displaystyle 1,60,000$ | Debtors $\displaystyle 3,50,000$ | ||
| Chavi $\displaystyle 1,00,000$ | $\displaystyle 4,40,000$ | Less : Provision for doubtful debts $\displaystyle 20,000$ | $\displaystyle 3,30,000$ |
| Creditors | $\displaystyle 2,50,000$ | Cash in hand | $\displaystyle 10,000$ |
| Profit and Loss Account | $\displaystyle 30,000$ | ||
| $\displaystyle 6,90,000$ | $\displaystyle 6,90,000$ |
Chavi retired on the above date. It was agreed that : (i) Plant and Machinery be valued at ₹ $\displaystyle 4,30$,000. (ii) The existing Provision for Bad Debts was to be increased by $\displaystyle 50$% . (iii) Chavi's share of Goodwill was valued at ₹ $\displaystyle 80,000$ and the same was to be treated without opening goodwill account. (iv) The total amount to be paid to Chavi was brought in by Arnav and Bhavi in such a way as to make their capitals in proportion to their new profit sharing ratio. Prepare Revaluation Account and Partners' Capital Accounts.
Divya and Ekta were partners in a firm sharing profits in the ratio of $\displaystyle 3$ : 1. On 31st March, $\displaystyle 2023$ they admitted Sona as a new partner for $\displaystyle 1$/4th share in the profits of the firm. Their Balance Sheet on that date was as follows $\displaystyle 1$ Balance Sheet of Divya and Ekta as at 31st March, $\displaystyle 2023$
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capitals : | Land and Building | $\displaystyle 5,00,000$ | |
| Divya $\displaystyle 10,00,000$ | Machinery | $\displaystyle 6,00,000$ | |
| Ekta $\displaystyle 7,00,000$ | $\displaystyle 17,00,000$ | Stock | $\displaystyle 1,50,000$ |
| General Reserve | $\displaystyle 3,20,000$ | Debtors $\displaystyle 4,00,000$ | |
| Creditors | $\displaystyle 5,40,000$ | Less : Provision for doubtful debts $\displaystyle 30,000$ | $\displaystyle 3,70,000$ |
| Investments | $\displaystyle 5,00,000$ | ||
| Cash | $\displaystyle 4,40,000$ | ||
| $\displaystyle 25,60,000$ | $\displaystyle 25,60,000$ |
Sona will bring ₹ $\displaystyle 4,00,000$ as her capital and her share of goodwill in cash. It was agreed that : (i) Goodwill of the firm was valued at ₹ $\displaystyle 2,40$,000. (ii) Land & Building were valued at ₹ $\displaystyle 7,12$,000. (iii) Provision for doubtful debts was found to be in excess by ₹ $\displaystyle 8,000$ (iv) A liability for ₹ $\displaystyle 20,000$ included in Creditors was not likely to arise . (v) The capitals of Divya and Ekta will be adjusted on the basis of Sona's capital by opening current accounts. Prepare Revaluation Account and Partners' Capital Accounts.
Marking-scheme solution
Dr. Revaluation A/c Cr.
Particulars Amount Particulars Amount
( ) ( )
To Provision for doubtful $\displaystyle 10,000$ By Plant and Machinery A/c $\displaystyle 1,30,000$
debts A/c
To Profit transferred to
Partners’ Capital A/c’s:
Arnav $\displaystyle 60,000$
Bhavi $\displaystyle 40,000$
Chavi $\displaystyle 20,000$ $\displaystyle 1,20,000$
$\displaystyle 1,30,000$ $\displaystyle 1,30,000$
Dr. Partners’ Capital Accounts Cr.
Particulars Arnav Bhavi Chavi Particulars Arnav Bhavi Chavi
₹ ₹ ₹ ₹ ₹ ₹
To Chavi’s $\displaystyle 48,000$ $\displaystyle 32,000$ - By Balance b/d $\displaystyle 1,80,000$ $\displaystyle 1,60,000$ $\displaystyle 1,00,000$
Capital A/c
By Revaluation
To Profit and $\displaystyle 15,000$ $\displaystyle 10,000$ $\displaystyle 5,000$ A/c $\displaystyle 60,000$ $\displaystyle 40,000$ $\displaystyle 20,000$
Loss A/c
By Arnav’s
To Cash A/c - - $\displaystyle 1,95,000$ Capital A/c - - $\displaystyle 48,000$
$\displaystyle 3,18,000$ $\displaystyle 2,12,000$ -
To Balance c/d By Bhavi’s
- $\displaystyle 32,000$
Capital A/c
$\displaystyle 1,41,000$ $\displaystyle 54,000$ -
By Cash A/c
$\displaystyle 3,81,000$ $\displaystyle 2,54,000$ $\displaystyle 2,00,000$ $\displaystyle 3,81,000$ $\displaystyle 2,54,000$ $\displaystyle 2,00,000$
Q. (b) Divya and Ekta were partners in a firm….
Ans.
Dr. Revaluation A/c Cr.
Particulars Amount Particulars Amount
( ) ( )
To Profit transferred to By Land and Building A/c $\displaystyle 2,12,000$
Partners’ Capital A/c’s:
Divya $\displaystyle 1,80,000$ By Provision for doubtful debts A/c $\displaystyle 8,000$
Ekta $\displaystyle 60,000$ $\displaystyle 2,40,000$
By Creditors A/c $\displaystyle 20,000$
$\displaystyle 2,40,000$ $\displaystyle 2,40,000$
Dr. Partners’ Capital Accounts Cr.
Particulars Divya Ekta Sona Particulars Divya Ekta Sona
₹ ₹ ₹ ₹ ₹ ₹
To Partners $\displaystyle 5,65,000$ $\displaystyle 5,55,000$ - By Balance b/d $\displaystyle 10,00,000$ $\displaystyle 7,00,000$ -
Current A/c’s
By Cash A/c - - $\displaystyle 4,00,000$
To Balance $\displaystyle 9,00,000$ $\displaystyle 3,00,000$ $\displaystyle 4,00,000$ By Revaluation
c/d. A/c $\displaystyle 1,80,000$ $\displaystyle 60,000$ -
By General
$\displaystyle 2,40,000$ $\displaystyle 80,000$ -
Reserve A/c
By Premium for
$\displaystyle 45,000$ $\displaystyle 15,000$
Goodwill A/c
$\displaystyle 14,65,000$ $\displaystyle 8,55,000$ $\displaystyle 4,00,000$ $\displaystyle 14,65,000$ $\displaystyle 8,55,000$ $\displaystyle 4,00,000$
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