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

                     Illustration 10.
                     D,  R and  L  were  in  partnership  sharing  profits  and  losses  in  the  ratio  of  3  :  2  :  1.  The
                     draft Balance Sheet as at 31st March, 2018 was as follows:

                     Liabilities                          `     Assets                              `
                     Capital A/cs:                              Building                           12,000
                     D                           24,000         Plant and Equipment                18,800
                     R                           12,000         Stock                               9,200
                     L                            6,000  42,000  Debtors                   12,400
                     Current A/cs:                              Less: Provision for Doubtful Debts   1,200   11,200
                     D                            1,920         Balance at Bank                    16,120
                     R                            1,680
                     L                            1,120  4,720
                     Loan—D                              5,000
                     Creditors                          15,600
                                                        67,320                                     67,320
                     D  retired  on  1st April,  2018  and  R and  L  continued  in  partnership,  sharing  profits  and
                     losses in the ratio of 2 : 1. D’s loan was repaid on 1st April, 2018 and it was agreed that
                     the  remaining  balance  due  to  him,  other  than  of  the  Current  Account,  shall  remain  as
                     loan to the partnership.
                     For the purpose of D’s retirement, it was agreed that:
                       (i)  Building be revalued at ` 24,000 and the Plant and Equipment at ` 15,800.
                       (ii)  Provision for Doubtful Debts was to be increased by ` 400.
                      (iii)  A creditor of ` 500 was not to be paid.
                      (iv)  ` 1,200 was to be written off from stock for damaged items included therein.
                       (v)  ` 4,240 payable as legal charges is to be accounted.
                      (vi)  Goodwill of the firm to be valued at ` 14,400 and D‘s share of the same be adjusted
                          into the accounts of R and L.
                     You  are  required  to  prepare  Revaluation  Account,  Capital  and  Current  Accounts  of  the
                     partners  (assuming  all  adjustments  are  to  be  made  through  the  Current  Accounts)  and
                     the Balance Sheet of R and L as at 1st April, 2018.
                     Solution:
                     Dr.                             REVALUATION ACCOUNT                              Cr.
                     Particulars                          `     Particulars                         `
                     To  Plant and Equipment A/c         3,000   By  Building A/c                  12,000
                     To  Provision for Doubtful Debts A/c      400   By  Creditors A/c               500
                     To  Stock A/c                       1,200
                     To  Outstanding Legal Charges A/c      4,240
                     To  Gain (Profit) on Revaluation trfd. to:
                        D’ Current A/c (3/6)      1,830
                        R’ Current A/c (2/6)      1,220
                        L’ Current A/c (1/6)       610   3,660
                                                        12,500                                     12,500
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