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

(v) Outstanding Expenses were not payable.
(vi) An unrecorded asset (Motor Cycle) valued at ` 20,000 to be accounted.
(vii) The average profit earned by a firm is ` 2,50,000 which includes overvaluation of stock of ` 15,000 on an
average basis. The capital invested in the business is ` 14,00,000 and the normal rate of return is 15%.
Goodwill of the firm is valued on the basis of 2 times the super profit.
(viii) Workmen Compensation claim is estimated at ` 1,00,000.
(ix) Total Capital of the firm will be same as before the change in profit-sharing ratio and will be in new profit-
sharing ratio of the partners, excess capital to be withdrawn and shortfall to be made good.
Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of the new firm.
Solution:
Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `

To Stock A/c 20,000 By Provision for Doubtful Debts A/c 20,000
To Computers A/c 40,000 By Salaries Payable A/c 20,000
To Gain (Profit) transferred to: By Outstanding Expenses A/c 20,000
Rohan 10,000 By Motor Cycle 20,000
Sohan 8,000
Mohan 2,000 20,000
80,000 80,000

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars Rohan Sohan Mohan Particulars Rohan Sohan Mohan
` ` ` ` ` `
To Advertisement Exp. A/c 25,000 20,000 5,000 By Balance b/d 6,00,000 3,00,000 3,00,000
To Rohan’s Capital A/c ... ... 8,334 By Revaluation 10,000 8,000 2,000
To Sohan’s Capital A/c ... ... 3,333 By General Reserve 90,000 72,000 18,000
To Bank A/c (Bal. Fig.) 4,43,334 91,333 ... By Workman Compensation
To Balance c/d 4,00,000 4,00,000 4,00,000 Reserve 50,000 40,000 10,000
By Investment Fluctuation
Reserve 1,10,000 88,000 22,000
By Mohan’s Capital A/c 8,334 3,333 ...
By Bank ... ... 64,667
8,68,334 5,11,333 4,16,667 8,68,334 5,11,333 4,16,667

BALANCE SHEET
as at 1st April, 2020
Liabilities ` Assets `
Bank Overdraft 50,000 Sundry Debtors 2,00,000
Salaries Payable 40,000 Stock 80,000
Creditors 2,50,000 Furniture 1,80,000
Workmen Compensation Claim 1,00,000 Computers 3,60,000
Capital A/cs: Car 4,00,000
Rohan 4,00,000 Motor Cycle 20,000
Sohan 4,00,000 Building 4,00,00
Mohan 4,00,000 12,00,000
16,40,000 16,40,000