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

Solution:
Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Stock A/c 3,000 By Provision for Doubtful Debts A/c 2,400
To Patents A/c 7,400 By Loss on Revaluation transferred to:
To Claim for Damages A/c 2,000 Usha’s Capital A/c 6,000
Asha’s Capital A/c 4,000 10,000
12,400 12,400

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars Usha Asha Neelam Particulars Usha Asha Neelam
` ` ` ` ` `
To Revaluation A/c (Loss) 6,000 4,000 ... By Balance b/d 40,000 35,000 ...
To Balance c/d 42,160 36,440 30,000 By Neelam’s Current A/c 2,160 1,440 ...
By Cash A/c ... ... 30,000
By Premium for Goodwill A/c 6,000 4,000 ...
48,160 40,440 30,000 48,160 40,440 30,000

BALANCE SHEET OF NEW FIRM as at 31st March, 2019
Liabilities ` Assets `
Creditors 27,000 Cash (` 24,000 + ` 40,000) 64,000
Claim for Damages 2,000 Debtors 48,000
Bills Payable 5,000 Less: Provision for Doubtful Debts 2,400 45,600
General Reserve 18,000 Stock (` 30,000 – ` 3,000) 27,000
Capital A/cs: Building 20,400
Usha 42,160 Neelam’s Current A/c 3,600
Asha 36,440
Neelam 30,000 1,08,600
1,60,600 1,60,600
Notes:
1. Neelam’s Share of Goodwill = ` 50,000 × 1/5 = ` 10,000, credited to Usha and Asha in their sacrificing
ratio, i.e., 3 : 2.
2. For Adjustment of General Reserve:
Dr. Neelam’s Current A/c: ` 3,600 (i.e., ` 18,000 × 1/5);
Cr. Usha’s Capital A/c: ` 2,160 (i.e., ` 3,600 × 3/5); and Asha’s Capital A/c: ` 1,440 (i.e., ` 3,600 × 2/5).
Illustration 12.
Rose and Daisy carried on a business in partnership sharing profits and losses in the ratio
of 3 : 1. Their Balance Sheet as at 31st March, 2019 was as under:
Liabilities ` Assets `
Capital A/cs: Land and Building 62,500
Rose 75,000 Furniture 2,500
Daisy 40,000 1,15,000 Debtors 41,250
General Reserve 10,000 Less: Provision for Doubtful Debts 1,250 40,000
Creditors 93,750 Bills Receivable 7,500
Stock 50,000
Cash at Bank 56,250
2,18,750 2,18,750