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Problem 11: Homework

Ramya and Rajesh are partners sharing profits and losses in the ratio of 3:2. Their Balance Sheet as on 31.03.2014 was as follows:

Balance Sheet as on 31.03.2014

\begin{tabular}{|c|c|c|c|}
\hline
Liabilities & ₹ & Assets & ₹ \\
\hline
Creditors & 57,000 & Cash & 21,500 \\
\hline
Bills Payable & 20,500 & Bills Receivable & 4,000 \\
\hline
General Reserve & 20,000 & Debtors- ₹ 60,000 & \\
\hline
Profit and Loss A/c & 5,000 & Less: RBD ₹ 3,000 & 57,000 \\
\hline
Capitals & & & \\
Ramya & 60,000 & Stock & 30,000 \\
Rajesh & 30,000 & Furniture & 10,000 \\
\hline
& & Buildings & 40,000 \\
\hline
& & Machinery & 25,000 \\
\hline
Total & 1,92,500 & Total & 1,92,500 \\
\hline
\end{tabular}

On 01.04.2014, Tamya is admitted into partnership on the following terms:

a) She should bring ₹ 40,000 as capital for a 1/4 share and ₹ 25,000 towards goodwill.

b) Depreciate Machinery and Furniture by 10%.

c) Appreciate Building by 20%.

d) Increase RBD on debtors to ₹ 6,000.

e) An amount of ₹ 2,000 due to a Creditor is not likely to be claimed and hence should be written off.

Prepare:

1. Revaluation Account

2. Partners' Capital Accounts

3. New Balance Sheet

Ans:

- Revaluation profit: ₹ 3,500
- Capital Accounts:
- Ramya: ₹ 92,100
- Rajesh: ₹ 51,400
- Tamya: ₹ 40,000
- Balance Sheet total: ₹ 2,59,000

Sagot :

GinnyAnsweridn
Alright, let's work through the problem step-by-step.

### Revaluation Account

1. Depreciate Machinery and Furniture by 10%:
- Machinery: ₹25,000 10% = ₹2,500
- Furniture: ₹10,000 10% = ₹1,000
- Total Depreciation: ₹2,500 + ₹1,000 = ₹3,500

2. Appreciate Building by 20%:
- Building: ₹40,000 20% = ₹8,000

3. Increase R.B.D. on Debtors to ₹6,000:
- Additional R.B.D needed: ₹6,000 - ₹3,000 = ₹3,000

4. Write-off ₹2,000 due to Creditors:
- Creditors to be written off: ₹2,000

Revaluation Profit Calculation:

Revaluation Profit = Appreciation on Building - Total Depreciation - Increase in R.B.D. - Write-off Creditors
- Revaluation Profit = ₹8,000 - ₹3,500 - ₹3,000 - ₹2,000
- Revaluation Profit = ₹-500

### Partners' Capital Accounts

1. Initial Capitals:
- Ramya: ₹60,000
- Rajesh: ₹30,000

2. Allocation of Revaluation Profit:
- Profit-sharing ratio: Ramya: Rajesh = 3:2
- Ramya's share: (3 / 5) (-₹500) = -₹300
- Rajesh's share: (2 / 5) * (-₹500) = -₹200

3. New Capitals after Revaluation Profit:
- Ramya: ₹60,000 - ₹300 = ₹59,700
- Rajesh: ₹30,000 - ₹200 = ₹29,800

4. Tamya's Capital Contribution:
- Tamya: ₹40,000

By adding Tamya, who brings ₹40,000 as capital and ₹25,000 as goodwill, we incorporate the partners' capital adjustments.

### New Balance Sheet

Assets:
1. Cash: ₹21,500 + ₹40,000 (Tamya's capital) + ₹25,000 (Goodwill) = ₹86,500
2. Bills Receivable: ₹4,000
3. Debtors after R.B.D Increase: ₹60,000 - ₹6,000 = ₹54,000
4. Stock: ₹35,000
5. Furniture after Depreciation: ₹10,000 - ₹1,000 = ₹9,000
6. Building after Appreciation: ₹40,000 + ₹8,000 = ₹48,000
7. Machinery after Depreciation: ₹25,000 - ₹2,500 = ₹22,500

Liabilities:
1. Creditors: ₹57,000 - ₹2,000 = ₹55,000
2. Bills Payable: ₹20,500
3. General Reserve: ₹20,000
4. Profit and Loss A/c: ₹5,000
5. Capital Accounts:
- Ramya: ₹59,700 + ₹25,000 (share of goodwill) = ₹84,700
- Rajesh: ₹29,800 + ₹25,000 (share of goodwill) = ₹54,800
- Tamya: ₹40,000

Total Balance after Revaluation and Adjustment:
- Total Liabilities: ₹55,000 + ₹20,500 + ₹20,000 + ₹5,000 + ₹84,700 + ₹54,800 + ₹40,000 = ₹2,79,000
- Total Assets: ₹86,500 + ₹4,000 + ₹54,000 + ₹35,000 + ₹9,000 + ₹48,000 + ₹22,500 = ₹2,59,000
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