# Practical Problem 05

Practical Problems | Q 5 | Page 204

 The BALANCE Sheet of SOHAN, ROHAN AND MOHAN who were SHARING profits AND Losses in the RATIO of 3:2:1 AS follows. Balance Sheet as on 31st March  2019 Liabilities Amount Assets Amount Bank Overdraft 18,000 Bank 48,000 Creditors 85,000 Debtors 30,000 Bills payable 40,000 Land and Building 40,000 Bank Loan 1,50,000 Machinery 80,000 General Reserve 27,000 Investments 40,000 Capital Account : Computers 40,000 Sohan 20,000 Stock 90,000 Rohan 20,000 Patents 12,000 Mohan 20,000 3,80,000 3,80,000 Mr. ROHAN died on 1 st October 2019 AND the following ADJUSTMENTS were MADE. 1. Goodwill of the firm is VALUED AT 30,000 2. LAND AND Building AND MACHINERY were found to be UNDERVALUED by 20% 3. Investments ARE VALUED AT  60,000 4. Stock to be UNDERVALUED by  5000 AND A provision of 10% AS debtors WAS required. 5. PATENTS were VALUE less 6. Mr. ROHAN WAS entitled to SHARE in profits up to the DATE of DEATH AND it WAS decided THAT he MAY be ALLOWED to RETAIN his DRAWINGS AS his SHARE of profit. ROHAN’s DRAWINGS till DATE of DEATH WAS Rs 25000 Prepare PARTNERS CAPITAL ACCOUNTS.

##### 34,500
 Dr                                                                                                                                        Revaluation A/c                                                                                                                       Cr Particular Amount Amount Particular Amount Amount To Stock A/c 5,000 By Land & Building A/c 10,000 To R.D.D A/c 3,000 By Machinery A/c 20,000 To Patents A/c 12,000 By Investment A/c 20,000 To Partner’s Capital A/c Sohan 15,000 Rohan 10,000 Mohan 5,000 30,000 50,000 50,000
 2. Firm goodwill A/c = Rs 30,000 distributed among partner in old Ratio i.e 3:2:1, Sohan :15,000    Rohan : 10,000  Mohan : 5,000 3. Increase in Value of land = (Book value)/(100-20) x 20  = 40,000/80 x 20 = 10,000 4. Increase in value of Machinery =  (Book value)/(100-20) x 20  = 80,000/80 x 20 = 20,000