P and Q are partners sharing profits in 3 : 1, R is admitted and the partners decide to share the future profits in the ratio of 2 : 1 : 1. The Balance Sheet of P and Q as at 31st March 2009 was as under:
 
Liabilities Rs. Assets Rs.
Creditors 30,000 Bank 15,000
Profit and Loss Account 60,000 Debtors 60,000
Capital A/cs:   Stock 1,50,000
P    3,50,000   Prepaid expenses 20,000
Q    2,20,000 5,70,000 Plant & Machinery 1,40,000
    Premises 2,75,000
  6,60,000   6,60,000
It was decided that:
(i) Part of the stock which has been included at a cost of Rs. 8,000 had been badly damaged in storage and could realise only Rs. 2,000
(ii) A bill for Rs. 7,000 for electric charges has been omitted to be recorded.
(iii) Plant & Machinery was found overvalued by Rs. 20,000. Premises be appreciated to Rs. 3,00,000.
(iv) Prepaid expenses be brought down to 40%.
(v) R's share of goodwill is valued at Rs. 20,000 but he is unable to bring it in cash.
(vi) R brings in capital proportionate to his share of profit in the firm
Prepare Revaluation A/c, Capital A/cs and the opening Balance Sheet.

Revaluation account

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Partners capital account

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Working

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New balance sheet

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Answer
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p and q are partners sharing profits and losses in  the ratio 3:1
 
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P and Q are partners sharing profits in 3 : 1, R is admitted and the partners decide to share the future profits in the ratio of 2 : 1 : 1. The Balance Sheet of P and Q as at 31st March 2009 was as under: Liabilities Rs. Assets Rs. Creditors 30,000 Bank 15,000 Profit and Loss Account 60,000 Debtors 60,000 Capital A/cs: Stock 1,50,000 P 3,50,000 Prepaid expenses 20,000 Q 2,20,000 5,70,000 Plant & Machinery 1,40,000 Premises 2,75,000 6,60,000 6,60,000It was decided that: (i) Part of the stock which has been included at a cost of Rs. 8,000 had been badly damaged in storage and could realise only Rs. 2,000 (ii) A bill for Rs. 7,000 for electric charges has been omitted to be recorded. (iii) Plant & Machinery was found overvalued by Rs. 20,000. Premises be appreciated to Rs. 3,00,000. (iv) Prepaid expenses be brought down to 40%. (v) R's share of goodwill is valued at Rs. 20,000 but he is unable to bring it in cash. (vi) R brings in capital proportionate to his share of profit in the firm Prepare Revaluation A/c, Capital A/cs and the opening Balance Sheet
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