Kanika, Disha and Kabir were partners sharing profits in the ratio of 2 : 1 : 1. On 31st March, 2016, their Balance Sheet was as under:

Liabilities ₹ Assets ₹
Trade Creditors
Employee’s Provident Fund
Kanika’s Capital
Disha’s Capital
Kabir’s Capital		 53,000
47,000
2,00,000
1,00,000
80,000		 Bank
Debtors
Stock
Fixed Assets
Profit & Loss A/c		 60,000
60,000
1,00,000
2,40,000
20,000
4,80,000 4,80,000

Kanika retired on 1st April, 2016. For this purpose, the following adjustments were agreed upon:

  • Goodwill of the firm was valued at 2 Year’s purchase of average profits of three completed years preceding the date of retirement. The profits for the year:

2013-14 were ₹ 1,00,000 and for 2014-15 were ₹ 1,30,000.

  • Fixed Assets were to be increased to ₹ 3,00,000.
  • Stock was to be valued at 120%.
  • The amount payable to Kanika was transferred to her Loan Account.

Prepare Revaluation Account, Capital Accounts of the partners and the Balance Sheet of the reconstituted firm.

[Ans.: Gain (Profit) on Revaluation – ₹ 80,000; Capital A/cs: Disha – ₹ 80,000; Kabir – ₹ 60,000; Kanika’s Loan – ₹ 3,00,000; Balance Sheet Total – ₹ 5,40,000.]

Solution:-



Kanika, Disha and Kabir were partners sharing profits in the ratio of 2 : 1 : 1. On 31st March, 2016, their Balance Sheet was as under:

Liabilities ₹ Assets ₹
Trade Creditors
Employee’s Provident Fund
Kanika’s Capital
Disha’s Capital
Kabir’s Capital		 53,000
47,000
2,00,000
1,00,000
80,000		 Bank
Debtors
Stock
Fixed Assets
Profit & Loss A/c		 60,000
60,000
1,00,000
2,40,000
20,000
4,80,000 4,80,000

Kanika retired on 1st April, 2016. For this purpose, the following adjustments were agreed upon:
(a) Goodwill of the firm was valued at 2 Year’s purchase of average profits of three completed years preceding the date of retirement. The profits for the year:
2013-14 were ₹ 1,00,000 and for 2014-15 were ₹ 1,30,000.
(b) Fixed Assets were to be increased to ₹ 3,00,000.
(c) Stock was to be valued at 120%.
(d) The amount payable to Kanika was transferred to her Loan Account.
Prepare Revaluation Account, Capital Accounts of the partners and the Balance Sheet of the reconstituted firm.

[Ans.: Gain (Profit) on Revaluation – ₹ 80,000; Capital A/cs: Disha – ₹ 80,000; Kabir – ₹ 60,000; Kanika’s Loan – ₹ 3,00,000; Balance Sheet Total – ₹ 5,40,000.]

Solution:-