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in Reconstitution of a Partnership Firm – Retirement/Death of a Partner by (25.6k points)
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The Balance sheet of Ajith, Babu and Chandu as on 31st March 2008 is given below:

The partners have been sharing profits and losses in 3:2:1. Ajith died on 1st April 2008 and the following adjustments are to be made in the books of accounts. 

a) A supplier for Rs. 14000 included in creditors is settled at Rs. 20,000.

b) Salary outstanding Rs.7000 is to record. 

c) Creditors of Rs.4000 will not be claimed. 

d) Bad debts amounting to Rs.3000 be written o. 

e) The entire capital of the firm fixed at Rs. 150000 between Babu and Chandu in their new profit sharing ratio by bringing in or paying o cash as the case may be.

f) Rs.40000 is paid to Ajith by arranging a loan from the bank. The balance is transferred to his Executor’s Loan A/c.

Prepare Revaluation Account, Partners Capital Ac-count, Bank Account and the Balance Sheet as on 1st April 2008.

1 Answer

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Revaluation a/c

Capital A/c

Particulars Ajith Babu Chandu Particulars Ajith Babu Chandu
To Revalutaion 6000 4000 2000 By Balance b/d 120000 75000 60000
To Bank 40000 By retained earning 9500 6333 3167
To Executor's loan A/c 83500 By Bank(Deficiency contiributed) 22667
To Bank (surplus) 11167
To Balance c/d 100000 50000
129500 104000 63167 129500 104000 63167

Bank A/c

Balance sheet

Working Note 

1. New Profit sharing ratio = 2:1 

2. The total capital of the new firm = 150000 

New capital of Babu = 150000 x 2/3 = 100000 

New capital of Chandu = 150000 x 1/3 = 50000 

Required capital of Babu = 100000 Balance existing in account = 77333 (75000 + 6333-4000) 

Amount to be brought in by babu = – 22667

Required capital of Chandu = 50000 

Balance existing in account = 61167 (60000 + 3167-2000) 

Surplus capital withdrawing by Chandu= +11167

3.

Creditors 32000
Less 14000
18000
Add (18000+20000) 20000
38000

Less creditors will not be claimed 4000 

Amount to be shown in the Balance sheet = 34000

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