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M.494 An Aid to Accountancy—CBSE XII

From 1st April, 2018, the partners decide to share profits and losses in the ratio of
3 : 2 : 1 and for that purpose the following revised values of assets were agreed upon:
Building ` 2,75,000, Machinery ` 90,000; Patents and Copyrights ` 1,32,500, Closing
Stock ` 2,00,000, Prepaid Insurance ` 5,000 and Sundry Debtors ` 1,42,500. Goodwill
of the firm was valued at ` 60,000.
Partners decide not to disturb the General Reserve. Also, they decide not to record the
revised values of assets in the books of account.
You are required to:
(a) Pass necessary Journal entry to give the effect to the above agreement without
opening Revaluation Account.
(b) Prepare Partners’ Capital Accounts and Balance Sheet of the reconstituted firm.
(c) Show your workings clearly. (6)

16. A, B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1. D is admitted
as a new partner on 31st March, 2018 for 1/4th share and is to pay ` 2,50,000 as capital.
Following is the Balance Sheet on the date of admission:
Liabilities ` Assets `
Capital A/cs: A 3,00,000 Building 2,50,000
B 3,00,000 Machinery 2,00,000
C 2,00,000 8,00,000 Furniture 1,50,000
Creditors 1,50,000 Stock 1,00,000
Bills Payable 50,000 Debtors 1,50,000
Bills Receivable 1,00,000
Bank 50,000
10,00,000 10,00,000

Following are the required adjustments on D’s admission:
(i) Out of the creditors, a sum of ` 50,000 is owing to D. This amount shall be
adjusted as a part of his capital.
(ii) Bills of ` 80,000 were discounted with the bank, out of which, a bill of
` 20,000 was dishonoured on 31st March, 2018, but no entry has been passed
for it. Due dates of the other discounted bills fall in April, 2018.
(iii) Advertisement Expenditure of ` 6,000 is to be carried forward to the next
accounting period.
(iv) Expenses debited in the Profit and Loss Account includes a sum of ` 10,000
paid for B’s personal life insurance policy.
(v) A Provision for Doubtful Debts @ 5% is to be created against Debtors.
(vi) Expenses on revaluation amounting to ` 10,100 is paid by A.
(vii) During the year, part of the furniture was sold for ` 25,000. The book value of
the furniture sold was ` 40,000. The proceeds was wrongly credited to the Sales
Account.
(viii) Value of goodwill is ` 7,56,000 and D brings his share by cheque.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet
after D’s admission.