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Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.
✉️ mujeebchemmala@gmail.com
9995983075 �
Reconstitution of a Partnership Firm
Admission of a Partner
Revaluation of Assets
and
Reassessment of Liabilities
പുനസംഘടിപ്പിക്കപ്പെട്ടാല് എന്തെല്ലാം മാറ്റങ്ങളാണ് അക്കൗണ്ടുകളില് ചെയ്യേണ്ടത്
Important points which
require attention at the time
of admission of a new partner
1. calculation of new ratio
2. calc. Of SR
3. valuation of goodwil
4. revaluation of assets etc.
Revaluation of Assets and Reassessment of Liabilities
Assets and liabilities of a firm must be revalued at the time of admission of a new partner. The reason is that the actual value of assets and liabilities may be different from those shown in the Balance Sheet.
Revaluation of Assets and Reassessment of Liabilities
The profit or loss on revaluation of Assets and Liabilities is ascertained with the help of a new account called :
Revaluation Account
Revaluation Account
Amount
Liabilities
Amount
Assets
Sunil’s Capital A/c
2,00,000
Shameer’s Capital A/c
2,00,000
General Reserve
50,000
5,10,000
5,10,000
Building
50,000
Land
2,50,000
Furniture
45,000
Stock
65,000
Sundry Debtors
70,000
Balance Sheet of Sunil and Shameer as on 31st March 2020
Bank Loan
25,000
Sundry Creditors
35,000
Cash
30,000
(Increase Rs. 50,000)
3,00,000
Land A/c
To Revaluation A/c
Dr.
50,000
50,000
(Increase in the value of asset)
Amount
Liabilities
Amount
Assets
Sunil’s Capital A/c
2,00,000
Shameer’s Capital A/c
2,00,000
General Reserve
50,000
5,10,000
5,10,000
Building
50,000
Land
2,50,000
Furniture
45,000
Stock
65,000
Sundry Debtors
70,000
Balance Sheet of Sunil and Shameer as on 31st March 2020
Bank Loan
25,000
Sundry Creditors
35,000
Cash
30,000
(Increase Rs. 50,000)
(Decrease Rs. 5,000)
3,00,000
40,000
Revaluation A/c
To Furniture A/c
Dr.
5,000
5,000
(Decrease in the value of asset)
Amount
Liabilities
Amount
Assets
Sunil’s Capital A/c
2,00,000
Shameer’s Capital A/c
2,00,000
General Reserve
50,000
5,10,000
5,10,000
Building
50,000
Land
2,50,000
Furniture
45,000
Stock
65,000
Sundry Debtors
70,000
Balance Sheet of Sunil and Shameer as on 31st March 2020
Bank Loan
25,000
Sundry Creditors
35,000
Cash
30,000
Investment
(Increase Rs. 50,000)
(Decrease Rs. 5,000)
(Unrecorded asset)
3,00,000
40,000
2,000
Investment A/c
To Revaluation A/c
Dr.
2,000
2,000
(Unrecorded asset)
Amount
Liabilities
Amount
Assets
Sunil’s Capital A/c
2,00,000
Shameer’s Capital A/c
2,00,000
General Reserve
50,000
5,10,000
5,10,000
Building
50,000
Land
2,50,000
Furniture
45,000
Stock
65,000
Sundry Debtors
70,000
Balance Sheet of Sunil and Shameer as on 31st March 2020
Bank Loan
25,000
Sundry Creditors
35,000
Cash
30,000
Investment
(Increase Rs. 50,000)
(Decrease Rs. 5,000)
(Unrecorded asset)
(Increase Rs. 1,000)
3,00,000
40,000
2,000
26,000
Revaluation A/c
To Bank Loan A/c
Dr.
1,000
1,000
(Increase in the value of liability)
Amount
Liabilities
Amount
Assets
Sunil’s Capital A/c
2,00,000
Shameer’s Capital A/c
2,00,000
General Reserve
50,000
5,10,000
5,10,000
Building
50,000
Land
2,50,000
Furniture
45,000
Stock
65,000
Sundry Debtors
70,000
Balance Sheet of Sunil and Shameer as on 31st March 2020
Bank Loan
25,000
Sundry Creditors
35,000
Cash
30,000
Investment
(Increase Rs. 50,000)
(Decrease Rs. 5,000)
(Unrecorded asset)
(Decrease Rs. 2000)
(Increase Rs. 1,000)
3,00,000
40,000
2,000
26,000
33,000
Sundry Creditors A/c
To Revaluation A/c
Dr.
2,000
2,000
(Decrease in the value of liability)
Amount
Liabilities
Amount
Assets
Sunil’s Capital A/c
2,00,000
Shameer’s Capital A/c
2,00,000
General Reserve
50,000
5,10,000
5,10,000
Building
50,000
Land
2,50,000
Furniture
45,000
Stock
65,000
Sundry Debtors
70,000
Balance Sheet of Sunil and Shameer as on 31st March 2020
Bank Loan
25,000
Sundry Creditors
35,000
Cash
30,000
Outstanding Wages
Investment
(Increase Rs. 50,000)
(Decrease Rs. 5,000)
(Unrecorded asset)
(Unrecorded liability)
(Decrease Rs. 2000)
(Increase Rs. 1,000)
3,00,000
40,000
2,000
26,000
33,000
500
Revaluation A/c
To Outstanding Wages A/c
Dr.
500
500
(Unrecorded liability)
Amount
Particulars
Amount
Particulars
Decrease in value of Assets
XXX
Increase in value of Liabilities
XXX
Unrecorded Liabilities
XXX
XXXXX
XXXXX
REVALUATION ACCOUNT
Profit on Revaluation transferred
to Old Partner’s Capital / Current A/c
in Old Ratio
XX
Increase in value of Assets
XXX
Decrease in value of Liabilities
XXX
Unrecorded Assets
XXX
Loss on Revaluation transferred
to Old Partner’s Capital / Current A/c
in Old Ratio
XX
Revaluation A/c
To Old Partner’s Capital / Current A/c
Dr.
Old Partners Capital / Current A/c
To Revaluation A/c
Dr.
(Profit on revaluation)
(Loss on revaluation)
Amount
Particulars
Amount
Particulars
Decrease in value of Assets
XXX
Increase in value of Liabilities
XXX
Unrecorded Liabilities
XXX
XXXXX
XXXXX
REVALUATION ACCOUNT
Profit on Revaluation transferred
to Old Partner’s Capital / Current A/c
in Old Ratio
XX
Increase in value of Assets
XXX
Decrease in value of Liabilities
XXX
Unrecorded Assets
XXX
Loss on Revaluation transferred
to Old Partner’s Capital / Current A/c
in Old Ratio
XX
Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.
Revaluation Account
പുനസംഘടിപ്പിക്കപ്പെട്ടാല് എന്തെല്ലാം മാറ്റങ്ങളാണ് അക്കൗണ്ടുകളില് ചെയ്യേണ്ടത്
Important points which
require attention at the time
of admission of a new partner
1. calculation of new ratio
2. calc. Of SR
3. valuation of goodwil
4. revaluation of assets etc.
Illustration
Following is the Balance Sheet of A and B who share profits in the ratio of 3:2.
Illustration 1
Amount
Liabilities
Amount
Assets
Sundry creditors
20,000
Capital Accounts :
A 30,000
50,000
70,000
70,000
Cash in hand
3,000
Debtors
12,000
Stock
15,000
Furniture
10,000
Plant and Machinery
30,000
Balance Sheet of A and B as on April 1, 2015
B 20,000
On that date C is admitted into the partnership on the following terms:
1. C is to bring in Rs. 15,000 as capital and Rs. 5,000 as premium for goodwill for 1/6 share.
2. The value of stock is reduced by 10% while plant and machinery is appreciated by 10%.
3. Furniture is revalued at Rs. 9,000.
4. A provision for doubtful debts is to be created on sundry debtors at 5% and
Rs. 200 is to be provided for an electricity bill.
5. Investment worth Rs. 1,000 (not mentioned in the balance sheet) is to be taken into account.
6. A creditor of Rs. 100 is not likely to claim his money and is to be written off.
Record journal entries and prepare revaluation account and capital account of partners.
Date
Particulars
LF
Debit Amt
Cash Account
To C’s Capital A/c
Dr
Journal
(Capital and premium brought in by C)
01/04/2015
20,000
Credit Amt
15,000
1. C is to bring in Rs. 15,000 as capital and Rs. 5,000 as premium for goodwill for 1/6 share.
To Premium A/c
5,000
Premium A/c
To A’s Capital A/c
Dr
(Premium distributed in SR 3:2)
5,000
3,000
To B’s Capital A/c
2,000
Here SR = OR ie 3:2
Revaluation A/c
To Stock A/c
Dr
(Decrease in the value of assets)
3,100
1,500
To Furniture A/c
1,000
Plant and Machinery A/c
To Revaluation A/c
Dr
(Increase in the value of assets)
3,000
4,000
2. The value of stock is reduced by 10% while plant and machinery is appreciated by 10%.
3. Furniture is revalued at Rs. 9,000.
4. A provision for doubtful debts is to be created on sundry debtors at 5% and
Rs. 200 is to be provided for an electricity bill.
5. Investment worth Rs. 1,000 (not mentioned in the balance sheet) is to be taken into account.
To Provision for Doubtful Debts
600
Investment A/c
Dr
1,000
To Outstanding electricity
(Unrecorded outstanding electricity bill)
200
Revaluation A/c
Dr
200
6. A creditor of Rs. 100 is not likely to claim his money and is to be written off.
To Revaluation A/c
(Creditors written off)
100
Sundry Creditors A/c
Dr
100
Amount
Particulars
Amount
Particulars
Stock
1,500
REVALUATION ACCOUNT
Revaluation A/c
To Stock A/c
Dr
3,100
1,500
To Furniture A/c
1,000
To Provision for Doubtful Debts
600
Furniture
1,000
Provision for doubtful debts
600
Amount
Particulars
Amount
Particulars
Stock
1,500
Plant and Machinery
3,000
Investment
1,000
REVALUATION ACCOUNT
Plant and Machinery A/c
To Revaluation A/c
Dr
3,000
4,000
Investment A/c
Dr
1,000
Furniture
1,000
Provision for doubtful debts
600
Amount
Particulars
Amount
Particulars
Stock
1,500
Plant and Machinery
3,000
Investment
1,000
REVALUATION ACCOUNT
To Outstanding electricity
200
Revaluation A/c
Dr
200
Furniture
1,000
Provision for doubtful debts
600
Outstanding electricity
200
Amount
Particulars
Amount
Particulars
Stock
1,500
Capital Accounts :
A - 800 x 3/5 480
800
4,100
4,100
Plant and Machinery
3,000
Investment
1,000
Sundry Creditors
100
REVALUATION ACCOUNT
B - 800 x 2/5 320
Furniture
1,000
Provision for doubtful debts
600
Outstanding electricity
200
To Revaluation A/c
100
Sundry Creditors A/c
Dr
100
OR = 3:2
6. A creditor of Rs. 100 is not likely to claim his money and is to be written off.
To Revaluation A/c
(Creditors written off)
100
Sundry Creditors A/c
Dr
100
To B’s Capital A/c
(Profit on revaluation shared in OR 3:2)
320
Revaluation A/c
Dr
800
To A’s Capital A/c
480
C
Particulars
Balance b/d
15,000
Premium
CAPITAL ACCOUNTS
B
20,000
2,000
A
30,000
3,000
Date
01/04/15
C
Particulars
B
A
Date
Cash
C
Particulars
15,000
Balance b/d
15,000
Premium
CAPITAL ACCOUNTS
B
22,320
20,000
2,000
A
33,480
30,000
3,000
Date
01/04/15
C
Particulars
15,000
Balance c/d
15,000
B
22,320
22,320
A
33,480
33,480
Date
01/04/15
Cash
Revaluation A/c
320
480
Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.