Page 114 - DEBKVOL-1

5.30 Double Entry Book Keeping—CBSE XII
Illustration 23.
Usha and Asha are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance
Sheet as at 31st March, 2019 was:

Liabilities ` Assets `
Creditors 27,000 Cash 24,000
General Reserve 18,000 Debtors 48,000
Bills Payable 5,000 Less: Provision for Doubtful Debts 4,800 43,200
Capital A/cs: Stock 30,000
Usha 40,000 Patents 7,400
Asha 35,000 75,000 Building 20,400
1,25,000 1,25,000

Neelam is admitted into the partnership giving her 1/5th share in the profits. Neelam is to bring
in ` 30,000 as her capital and her share of goodwill in cash subject to the following terms:
(i) Goodwill of the firm to be valued at ` 50,000.
(ii) Stock to be reduced by 10% and the Provision for Doubtful Debts be reduced by ` 2,400.

(iii) Patents to be valueless.
(iv) There was a claim against the firm for damages amounting to ` 2,000. The claim has
now been accepted.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the
new firm. (Delhi, AI, Foreign 2004, Modified)

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 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 6,000 4,000 ... By Balance b/d 40,000 35,000 ...
—Loss By General Reserve A/c 10,800 7,200 ...
To Balance c/d 50,800 42,200 30,000 By Cash A/c ... ... 30,000
By Premium for
Goodwill A/c 6,000 4,000 ...
56,800 46,200 30,000 56,800 46,200 30,000