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Nitin, Tarun and Amar are partners sharing profits equally and decide to share profits in the ratio of 2 : 2 : 1 w.e.f. 1st April, 2019. The extract of their Balance Sheet as at 31st March, 2019 is as follows:

Liabilities Assets
Investments Fluctuation 60,000 Investments (At Cost) 4,00,000

Answer the following questions:

i. On that date, following journal entry was passed by the firm:

Date Particulars Debit
(₹)
Credit
(₹)
April 2019 Investment Fluctuation Reserve A/c Dr. 60,000
To Nitin’s Capital A/c 20,000
To Tarun’s Capital A/c 20,000
To Amar’s Capital A/c 20,000

Which of the following adjustment was existing in the books of the firm on the date of reconstitution? 

(a) When its Market Value is not given 

(b) When its Market Value is ₹ 3,10,000 

(c) When its Market Value is ₹ 4,24,000 

(d) When its Market Value is ₹ 3,70,000

ii. On that date, following journal entry was passed by the firm:

Date Particulars Debit
(₹)
Credit
(₹)
April 2019 Investment Fluctuation Reserve A/c Dr. 60,000
To Investment A/c 30,000
To Nitin’s Capital A/c 10,000
To Tarun’s Capital A/c 10,000
To Amar’s Capital A/c 10,000

Which of the following adjustment was existing in the books of the firm on the date of reconstitution?

(a) When its Market Value is ₹ 4,00,000 

(b) When its Market Value is ₹ 4,24,000

(c) When its Market Value is ₹ 3,70,000 

(d) When its Market Value is ₹ 3,10,000

iii. On that date, following journal entry was passed by the firm:

Date Particulars Debit
(₹)
Credit
(₹)
April 2019 Investment Fluctuation Reserve A/c Dr. 60,000
Revaluation A/c Dr. 30,000
To Investment A/c 90,000

Which of the following adjustment was existing in the books of the firm on the date of reconstitution?

(a) When its Market Value is not given 

(b) When its Market Value is ₹ 3,10,000 

(c) When its Market Value is ₹ 4,24,000 

(d) When its Market Value is ₹ 3,70,000

iv. On that date, following journal entry was passed by the firm:

Date Particulars Debit
(₹)
Credit
(₹)
April 2019 Investment A/c Dr. 24,000
To Revaluation A/c 24,000

Which of the following adjustment was existing in the books of the firm on the date of reconstitution? 

(a) When its Market Value is not given 

(b) When its Market Value is ₹ 3,10,000 

(c) When its Market Value is ₹ 4,24,000 

(d) When its Market Value is ₹ 3,70,000

1 Answer

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by (53.9k points)
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Best answer

i. (a) When its Market Value is not given

ii. (c) When its Market Value is ₹ 3,70,000

iii. (b) When its Market Value is ₹ 3,10,000

iv. (c) When its Market Value is ₹ 4,24,000 (d) When its Market Value is ₹ 3,70,000

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