Book debts were ₹1,00,000 as given in the balance sheet as on 31st March, 2022. On 1st April, 2022 the partners decided to share profits equally instead of distributing the profits in their capital ratio. On the date, bad debts for ₹40,000 were written off and a new provision for doubtful debt is to be maintained @5%. How will you treat their adjustment in revaluation account of the firm?
Revaluation account - debited by ₹43,000
Book debts = ₹1,00,000; Bad debts written off = ₹40,000. Net book debts after writing off bad debts = ₹60,000. Provision for doubtful debts = 5% of ₹60,000 = ₹3,000. Total loss = ₹40,000 + ₹3,000 = ₹43,000. Since this is a loss, it is debited to the Revaluation Account.
Important Questions from Reconstitution of a Partnership: Change in Profit Sharing Ratio
What are the matters that need adjustments at the time of Reconstitution of partnership?
(A) Preparation of Realisation A/c
(B) Calculation of Sacrificing ratio
(C) Distribution of accumulated profits
(D) Valuation of goodwill
(E) Preparation of partner’s loan A/c
Choose the correct answer from the options given below:
Match List I with List II:
List – I List – II A. Sacrificing Ratio I. New Ratio – Old Ratio B. New Ratio II. Old Ratio – New Ratio C. Gaining Ratio III. Old Ratio + Gaining Ratio D. Value of Goodwill IV. Average profit × No. of years purchase Choose the correct answer from the options given below:
An extract of Balance Sheet as on 31 March 2023:
Liabilities ₹ Assets ₹ Provision for legal damages 4,800 Furniture 41,000 Premises 85,000 Additional Information:
Premises found under-valued by 15% and provision for legal damages to be created up to ₹6,000.
On the basis of above information, the journal entry at the time of reconstitution of firm is:
Which of the following will affect the Revaluation Gain or Loss at the time of reconstitution?
A. Undervaluation of Building
B. Overvaluation of Stock
C. Valuation of Goodwill
D. Reserve appearing in Books
E. Unrecorded Assets
Choose the correct answer from the options given below:
Consider the following facts related to Revaluation Account, its adjustments and treatment of reserves.
A. Revaluation profit is distributed in the capital ratio of the partners.
B. Revaluation Account is considered as Nominal Account.
C. When all debtors are good, existing provision for doubtful debt is not distributed and continued in future.
D. Under-valuation of Inventories is adjusted on the credit side of Revaluation A/c.
E. Excess amount of workmen compensation claim over workmen compensation reserve is transferred to debit side of Revaluation A/c.
Choose the correct answer from the options given below:
