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M.506 An Aid to Accountancy—CBSE XII

Working Notes:
(i) Sacrifice/(Gain) = Old Share – New Share
13
X = - = ʈ 1 gain;
Á˜
3 6 ˯
6
1 2 0
Y = - = ;
3 6 6
1 1 1
Z = - = sacrifice.
3 6 6
(ii) Calculation of Net Effect of Adjustment to be made:
• Increase in value of Assets, i.e., ` 75,000 (Building) + ` 75,000 (Closing Stock) + ` 5,000 `
(Prepaid Insurance) 1,55,000

• Decrease in value of Assets, i.e., ` 10,000 (Machinery) + ` 17,500 (Patents and Copyrights)
+ ` 7,500 (Sundry Debtors) (35,000)
Gain (Profit) on Revaluation of Assets 1,20,000
Adjustment for General Reserve 60,000
Adjustment for Goodwill 60,000
Net Effect of Adjustment to be made 2,40,000

16. In the Books of the Firm
Dr. REVALUATION ACCOUNT Cr.

Particulars ` Particulars `
To Provision for Doubtful Debts A/c (WN 2) 8,500 By Advertisement Expenditure A/c 6,000
To A’s Capital A/c (Revaluation Expenses) 10,100 By B’s Capital A/c 10,000
To Furniture A/c (WN 4) 40,000 By Loss transferred to:
A’s Capital A/c 21,300
B’s Capital A/c 14,200
C’s Capital A/c 7,100 42,600
58,600 58,600

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars A B C D Particulars A B C D
` ` ` ` ` ` ` `

To Revaluation A/c ... 10,000 ... ... By Balance b/d 3,00,000 3,00,000 2,00,000 ...
To Revaluation A/c 21,300 14,200 7,100 ... By Creditors A/c ... ... ... 50,000
(Loss) By Bank A/c ... ... ... 2,00,000
To Balance c/d 3,83,300 3,38,800 2,24,400 2,50,000 By Premium for
Goodwill A/c 94,500 63,000 31,500 ...
By Revaluation A/c 10,100 ... ... ...
4,04,600 3,63,000 2,31,500 2,50,000 4,04,600 3,63,000 2,31,500 2,50,000