Page 106 - ISCDEBK-12

5.4 Double Entry Book Keeping (Section A)—ISC XII

Illustration 2.
Albert, Boris and Cyril are partners sharing profits and losses in the ratio of 3 : 2 : 1 and
their Balance Sheet as at 31st March, 2018 stood as under:
Liabilities ` Assets `

Albert’s Capital 50,000 Building 70,000
Boris’s Capital 50,000 Machinery 25,000
Cyril’s Capital 50,000 Stock 32,000
Creditors 17,000 Debtors 15,000
Bank 25,000
1,67,000 1,67,000

Albert died on 1st July, 2018 and the following decisions were taken by the surviving
partners. According to the Partnership Deed, his executors were entitled to:
(i) The deceased partner’s capital as appearing in the last Balance Sheet and interest
thereon @ 6% p.a. up to the date of death.

(ii) His share of profit for the period he was alive based on the figure of 31st March, 2018.
(iii) Goodwill according to his share of profit to be calculated by taking twice the
amount of the average profit of the last three years. The profits of the previous
years were:
31st March, 2018—` 11,000

31st March, 2017—` 15,000
31st March, 2016—` 10,000
(iv) Assets were to be revalued:
Building—` 80,000,
Stock—` 30,000,
Provision for Doubtful Debts @ 10%.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet as at
1st July, 2018.
(All calculations are to be made to the nearest rupee.) (ISC 2000, Modified)

Solution:
Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Stock A/c 2,000 By Building A/c 10,000
To Provision for Doubtful Debts A/c 1,500
To Gain (Profit) transferred to Capital A/cs:
Albert (3/6) 3,250
Boris (2/6) 2,167
Cyril (1/6) 1,083 6,500
10,000 10,000