The Question : Gini, Bini and Mini were in partnership sharing profits and losses in the ratio of 5:2:2. Their Balance Sheet as at 31st March, 2021 was as follows:On 31st March, 2021, Gini retired from the firm. All the partners agreed to revalue the assets and liabilities on the following basis: (i) Bad debts amounted to ₹ 5,000. A provision for doubtful debts was to be maintained at 10% on debtors. (ii) Partners have decided to write off existing goodwill. (iii) Goodwill of the firm was valued at ₹ 54,000 and be adjusted into the Capital Accounts of Bini and Mini, who will share profits in future in the ratio of 5:4. (iv)The assets and liabilities valued as: Inventories ₹1,30,000; Machinery ₹ 82,000; Furniture ₹1,95,000 and Building ₹ 6,00,000. (v) Liability of ₹23,000 is to be created on account of Claim for Workmen Compensation. (vi) There was an unrecorded investment in shares of ₹ 25,000. It was decided to pay off Gini by giving her unrecorded investment in full settlement of her part payment of ₹ 28,000 and remaining amount after two months. Prepare Revaluation Account and Partners’ Capital Accounts as on 31st March, 2021.
Solution for the question :
REVALUATION A/CParticularsDr.Amount(₹)ParticularsCr.Amount(₹)To Baddebt A/c2700By Furniture A/c15,000To Provision for doubtful debts A/c3300By Building A/c30,000To Inventories A/c4000By Investment A/c 28,000To Machinery A/c18000To Partner’s Capital A/c:Gini 25,000Bini 10,000Mini 10,00045,00073,00073,000Partner’s Capital A/cDr.ParticularsGiniBiniMiniCr.ParticularsGini BiniMiniTo Goodwill A/c35,00014,00014,000By Balance b/d4,60,0003,00,0002,90,000To Gini’s Capital A/c18,000 12,000 By Workmen CompensationTo Investment A/c28,000Reserve A/c5,0002,0002,000To Gini’s Loan A/c 4,57,000By Bini’s Capital A/c18,000To Balance c/d2,80,0002,76,000By Mini’s Capital A/cBy Revaluation A/c12,00025,00010,00010,0005,20,0003,12,0003,02,0005,20,0003,12,0003,02,000
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