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    Revaluation Account for Partnership

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    Chan, Tan and Eric were in partnership sharing profits and losses in the ratio Chan 2/3, Tan
    1/4 and Eric 1/12.

    Their summarized Balance Sheet as at 31 October 2000 was as follows:

    $ $ $
    Fixed Assets (at Book Value)
    Premises 120000
    Machinery 60000
    Motor Vehicle 9000 189000

    Current Assets
    Stock 14200
    Debtors 18000
    less Provision for Doubtful Debts 360 17640
    Bank 16160
    48000

    Current Liabilities
    Creditors 12000 36000
    225 000

    Long-term Liabilities
    Loan from Chan 9000
    216000

    Capital Accounts
    Chan 144000
    Tan 54000
    Eric 18000 216000

    The partnership did not maintain partners' current accounts.
    Chan left the partnership on 31 October 2000 to start his own business.
    Tan and Eric continued the partnership, sharing profits in the ratio Tan 3/4 and Eric 1/4.

    The following adjustments were made
    (a) Premises were valued at $150000
    (b) Machinery was revalued at $ 50000
    c) Chan took over machinery which had been revalued at $ 20000
    (d) Provision for doubtful debts was reduced to $ 260
    (e) stock was reduced in value by $ 1200

    The value of Goodwill was agreed at $ 48000,but was not remain in the partnership accounts.
    Chan agreed not to take the cash due to him,but to let it remain as a loan to the new partnership,with a suitable rate of interest to be agreed.

    (a) Draw up the revaluation account to show the above adjustments.
    (b)Draw up the three partners Capital accounts,in columnar form,after the adjustments have taken place.

    (a) Draw up the revaluation account to show the above adjustments.
    (b)Draw up the three partners Capital accounts,in columnar form, after the adjustments have taken place.

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    https://brainmass.com/business/accounting/revaluation-account-partnership-9092

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    A Revaluation Account

    Debit Credit
    Particulars Amount Particulars Amount
    To Machinery $10,000 By Premises $30,000
    To Stock $1,200 By Provision for doubtful debts $100
    * To Partners Capital Account (Profit on account of revaluation)
    Chan =(8/12)of 18900=12600
    Tan =(3/12)of 18900=4725 Note
    Eric =(1/12)of 18900=1575 $18,900 $18,900 is the net of debit and credit(balancing figure) =30100-10000-1200
    $30,100 $30,100

    B Capital Accounts

    Debit Credit

    Particulars Amount Particulars Amount
    Chan Tan Eric Chan Tan Eric

    To Machinery $20,000 By Opening Balance $144,000 $54,000 $18,000
    To Goodwill $24,000 $8,000 By ...

    Solution Summary

    The solution provides answers on revaluation account for a partnership. The partnership sharing profits and losses in the ratio are given.

    $2.49

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