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Home Questions MYVAFK886H
Target Exam

CUET

Subject

Accountancy

Chapter

Reconstitution of Partnership Firm: Retirement and Death

Question:

Arjun, Vasisht and Keshav were partners in a business sharing profits equally. Vasisht retires on 31st March 2022 when the Balance sheet stood as follows:

Balance Sheet as at 31st March 2022

Liabilities

 Amount  (₹)

Assets

 Amount (₹) 

 Bills payable

3,000

 Land and Building

24,375

 Creditors

525

 Furniture

6,000

 General Reserve

11,250

 Inventory

1,050

 Profit and loss A/c

4,500

 Debtors

9,450

 Capital

 

 Bills Receivable

3,750

 Arjun                11,250

 

 Cash at Bank

5,625

 Vasisht            12,375

 

 Advertisement Suspense

4,650

 Keshav            12,000

35,625

 

 

 

54,900

 

54,900

Additional information:

1. Arjun and Keshav decided to share future profits in the ratio of 3 : 2
2. Value of Land and Building appreciated by 12%
3. Value of Goodwill of the firm ₹37,500.
4. A provision for doubtful debts is maintained @ 8%
5. Inventory includes an item of ₹450 which has become obsolete

On the basis of the following information answer the question.

Calculate the gain/loss on Revaluation.

Options:

₹ 1,719 Gain

₹ 1,917 loss

₹ 1,719 loss

₹ 1,917 gain

Correct Answer:

₹ 1,719 Gain

Explanation:

The correct answer is Option (1) - ₹ 1,719 Gain

REVALUATION ACCOUNT

 PARTICULARS  AMOUNT (₹)   PARTICULARS  AMOUNT (₹)
 To provision for doubtful debts
(8% of 9450)		  756  By land & building
(24375 x 12/100)		  2925
 To inventory  450    
 To gain on revaluation
(distributed equal between partners in old ratio)		  1719    
   2925    2925

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