Question

Prina, Qadir and Kian were partners in a firm sharing profits in the ratio of 7:2:1. On 31st March, 2023, their Balance Sheet was as follows: Balance Sheet of Prina, Qadir and Kian as on 31st March, 2023 \begin{center} \begin{tabular}{|l|r|l|r|} Liabilities & Amount (\rupee) & Assets & Amount (\rupee)
Creditors & 2,10,000 & Land & 12,00,000
Workmen’s Compensation Reserve & 5,40,000 & Building & 9,00,000
General Reserve & 3,00,000 & Furniture & 3,00,000
Capitals: & & Stock & 6,60,000
Prina & 9,60,000 & Debtors & 6,00,000
Qadir & 8,40,000 & Less: Provision for Doubtful Debts & (30,000)
Kian & 9,00,000 & & 5,70,000
Total & 39,00,000 & Cash at Bank & 3,00,000
& & Total & 39,00,000
\end{tabular} \end{center} Adjustments: Goodwill of the firm was valued at \rupee 12,00,000. Land to be appreciated by 30\%, and building to be depreciated by \rupee 3,54,000. A provision of 6\% is to be maintained on debtors. Liability for workmen’s compensation was determined at \rupee 1,40,000. Amount payable to Qadir was transferred to his loan account. Prina’s and Kian’s capital to be adjusted in their new profit-sharing ratio.

Hint:

Revaluation gains or losses must be shared among partners in their old ratio. Adjust the retiring partner’s share of goodwill and revaluation before settlement.

Answer 1

Revaluation Account: \begin{center} \begin{tabular}{|l|r|l|r|} Particulars & Amount (\rupee) & Particulars & Amount (\rupee)
To Building A/c (Depreciation) & 3,54,000 & By Land A/c (Appreciation) & 3,60,000
To Provision for Doubtful Debts & 6,000 & &
To Workmen’s Compensation Reserve & 4,00,000 & &
Total & 7,60,000 & Total & 3,60,000
\end{tabular} \end{center} Partners’ Capital Accounts: \begin{center} \begin{tabular}{|l|r|r|r|r|} Particulars & Prina (\rupee) & Qadir (\rupee) & Kian (\rupee) & Total (\rupee)
Balance b/d & 9,60,000 & 8,40,000 & 9,00,000 & 27,00,000
General Reserve & 2,10,000 & 60,000 & 30,000 & 3,00,000
Goodwill (Compensating Qadir) & 7,00,000 & -- & 5,00,000 & 12,00,000
Revaluation Loss & (4,90,000) & (1,40,000) & (70,000) & (7,00,000)
Adjusted Balance & 13,80,000 & -- & 13,60,000 & 27,40,000
\end{tabular} \end{center}