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Model Test Papers M.369

Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Machinery A/c 10,000 By Patents A/c 10,000
To Gain (Profit) transferred to: By Land A/c 25,000
X’s Capital A/c 12,500
Y’s Capital A/c 7,500
Z’s Capital A/c 5,000 25,000
35,000 35,000
Working Notes:
1. Valuation of Goodwill:
` 87,500 + 1,00,000 + 75,000` `
Average Profit = = ` 87,500
3
Goodwill = Average Profit × No. of Years’ Purchase
= ` 87,500 × 2 = ` 1,75,000.
2. Adjustment of Goodwill:
Goodwill of the firm = ` 1,75,000
Z’s Share of Goodwill = 2/10 of ` 1,75,000 = ` 35,000, which will be contributed by X and Y in their gaining
ratio, i.e., 5 : 3. Thus,
X’s Contribution = 5/8 of ` 35,000 = ` 21,875; and
Y’s Contribution = 3/8 of ` 35,000 = ` 13,125.
13. In the Books of the Firm
Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Furniture A/c 10,000 By Building A/c 1,00,000
To Gain (Profit) transferred to: By Land A/c 90,000
A’s Capital A/c 1,26,000 By Investment A/c (` 1,29,000 – 1,20,000) 9,000
B’s Capital A/c 63,000 1,89,000
1,99,000 1,99,000

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars A (`) B (`) Particulars A (`) B (`)
To A’s Capital A/c ... 40,000 By Balance b/d 6,00,000 3,00,000
To Balance c/d 7,72,000 3,26,000 By Revaluation A/c (Profit) 1,26,000 63,000
By Investment Fluctuation Reserve 6,000 3,000
By B’s Capital A/c (WN 1 and 2) 40,000 ...
7,72,000 3,66,000 7,72,000 3,66,000
BALANCE SHEET OF A AND B as at 1st April, 2018
Liabilities ` Assets `
Creditors 78,500 Land 1,50,000
Capital A/cs: Building 5,00,000
A 7,72,000 Furniture 27,500
B 3,26,000 10,98,000 Debtors 60,000
Stock 2,50,000
Investment 1,29,000
Bank 45,000
Cash 15,000
11,76,500 11,76,500