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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