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Model Test Papers M.247

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Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Machinery A/c 2,000 By Building A/c 5,000
To Stock A/c 1,750 By Bills Receivable A/c (Shikha) 1,750
To Provision for Doubtful Debts A/c 480
To Gain (Profit) transferred to:
A’s Capital A/c 1,680
B’s Capital A/c 840 2,520
6,750 6,750

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars A (`) B (`) C (`) Particulars A (`) B (`) C (`)
To Partners’ Current A/cs 3,680 8,840 ... By Balance b/d 50,000 32,000 ...
(Balancing Figure) By General Reserve A/c 4,000 2,000 ...
To Balance c/d (WN 2) 60,000 30,000 30,000 By Revaluation A/c (Gain) 1,680 840 ...
By Bank A/c ... ... 30,000
By Premium for
Goodwill A/c 8,000 4,000 ...
63,680 38,840 30,000 63,680 38,840 30,000

BALANCE SHEET OF NEW FIRM as at 1st April, 2018
Liabilities ` Assets `
Creditors 8,000 Cash in Hand 2,000
Bills Payable 4,000 Cash at Bank 52,000
Current A/cs: Sundry Debtors 8,000
A 3,680 Less: Provision for Doubtful Debts 480 7,520
B 8,840 12,520 Bills Receivable (Shikha) 1,750
Capital A/cs: Stock 8,250
A 60,000 Furniture 5,000
B 30,000 Machinery 23,000
C 30,000 1,20,000 Building 45,000
1,44,520 1,44,520
Working Notes:
1. Calculation of New Profit-sharing Ratio:
Let Total Share be 1;
1 3
C’s Share = ; Remaining Share = , which is taken by A and B in their old ratio, i.e., 2 : 1. Thus,
4 4
3 2 2 3 1 1 1
A’s New Share = ¥ = ; B’s New Share = ¥ = ; C’s Share =
4 3 4 4 3 4 4
2 11
Thus, New Profit-sharing Ratio of A, B and C = : : = 2 : 1 : 1.
444
2. Adjustment of Capital:
C’s Share of Capital for 1/4 share = ` 30,000
Total Capital of the New Firm = ` 30,000 × 4 = ` 1,20,000
Thus, A’s Capital in the New Firm = ` 1,20,000 × 2/4 = ` 60,000;
B’s Capital in the New Firm = ` 1,20,000 × 1/4 = ` 30,000.