Question 1

Sharifa and Huda were partners sharing rofit and oss in the ratio of 3:2. they decided to admit Farima into the
partnership and revalue their assets and liabilities as indicated here under.

1) To Bring into record investment of R.O 18,000 which had not so far been recorded in the books of the firm.
2) To depreciate stock, furniture and machinery by R.O 18,000, R.O 6,000 and R.O 30,000 respectively.
3) To provide for workmen's compensation of R.O 24,000.

Solution

Revaluation Account
Particulars Amount Particulars Amount
To Stock 18,000 By Investments 18,000
To Furniture 6,000
To Machinery 30,000 Loss on Revaluation
To Workmens Compensation 24,000 By Sharifa's Capital A/c 36,000
By Huda's Capital A/c 24,000
Total 78,000 78,000

Revaluation loss 60000 (78000-18000)

Sharifa's loss 36000
Huda's Loss 24000
t Farima into the

books of the firm.

spectively.
 Question 2
V and K were partners sharing profits and losses as 605 to V and 40% to K. their balnace sheet as at 1st january, 2005
stood as under
The partners to admit E into the firm subject to revaluation of the following items.
1) Stock was to be reduced by R.O 4,000.
2) Land and Building were to be valued at R.O 160,000
3) A provision of 2 𝟏⁄𝟐 % was to be created for doubtful debtors
4) A liablity of R.O 2,600 for outstanding expenses had been omitted to be recorded in the books
5) E contributed R.O 60,000 as his share of capital.

Balance Sheet(1st Jan, 2005)

Liabilities Amount Assets Amount
Sundry creditors 96000 Cash in Hand 4000
Bills Payable 34000 Sundry Drs 56000
Capital A/C: Less Provision 1400 56000
V 90000 stock [40000-4000] 40000
K 80000 Plant & Machinery 80000
Outstanding exp 2600 Land & Building [1200 120000
Total 300000 300000

Solution

Revaluation A/C
Particulars Amount Particulars Amount
To Stock 4000 By land & building 40000
[1,60,000-1,20,000]
To Provision for doubtful debts
56000*2.5% 1400
To Outstanding Exp 2600
To Gain on Revaluation

V [32000*60%] = 19200
K [32000*40%] = 12800 32000
Total 40000 40000

Capital A/C
V K V K
To Balance c/d 109200 92800 By Bal b/d 90000 80000
By revaluation 19200 12800
Total 109200 92800 109200 92800
s at 1st january, 2005

oks

Balance Sheet
Liabilities Amount Assets
Sundry creditors 96000 Cash in Hand
Bills Payable 34000 Sundry Drs 56000
Capital A/C: Less Provision 1400
V 109200 stock [40000-4000]
K 92800 Plant & Machinery
Outstanding exp 2600 Land & Building [120000+40000]
Total 334600
Amount
4000

54600
36000
80000
160000
334600
 Question 3
The following is the balance sheet of Amutha and Rama sharing profits 3:2, as on 31,3,2015
On 1,4,2015 they decided to admit latha into the partnership for 1/5 of the future profits on the following terms
1) Latha shall bring in a capital of R.O 30,000 and R.O 4,000 as her share of goodwill.
2) Goodwill of the firm being valued at R.O 20,000.
3) Land and building be appreciated by 10%.
4) Stock is depreciated by R.O 3,000 a d provision for outstanding liability is created at R.O 2,000

Balance Sheet
Liabilities Amount Assets Amount
Sundry creditors 80000 Bank 10000
Bills Payable 20000 Sundry Debtor 30000
Capital A/C: Stock 20000
Amantha 40000 Machinery 40000
Rama 30000 Land & Buildings 70000
70000

Total 170000 170000

Solution

Revaluation A/c
Particulars Amount Particulars amount
To Stock 3000 By Land and building 7000
To Provision for outstanding liability 2000
To profit
To:
Amutha 1200
Rama 800 2000
Total 7000 7000

Bank A/c
Particulars Amount Particulars amount
Balance 10000 By balance c/d 40000
To Latha's Capital 30000
Total 40000 40000

Balance Sheet
Liabilities Amount Assets Amount
Sundry creditors 80000 Bank 40000
Bills Payable 20000 Sundry Debtor 30000
Capital A/C: Stock 17000
Amantha 43600 Machinery 40000
Rama 32400 Land & Buildings 77000
Latha 30000 106000
Outstanding Provision -2000
Total 204000 204000
llowing terms

Capital A/c
Particulars Amutha Rama Latha Particular Amutha
To Capitals A/c: By balance b/d 40000
Amutha - - 2400 By revaluation a/c 1200
Rama - - 1600 by cash -
To Balance c/d 43600 32400 30000 By Latha's capital 2400
Total 43600 32400 34000 43600
Rama Latha
30000 -
800 -
- 34000
1600 -
32400 34000