Question

Following information use in Question NO.5& 6 M/s. Mahima LLC a partnership firm starts the business with total capital of OMR 156,000. The assets and liabilities of the firm listed in the table below. Name of Account OMR Name of Account OMR Cash 54,000 Bank Loan 48,000 Sundry Debtors 84,000 Bonds 60,000 Stock 30,000 Bills Payable 96,000 Machinery 48,000 Sundry Creditors 120,000 Land 84,000 Bank Overdraft 30,000 Furniture 30,000 General Reserve 60,000 Premises 48,000 Profit & Loss A/C 30,000 Building 120,000 A’s Capital Account 72,000 Plant 72,000 B’s Capital Account 48,000 Bill Receivable 30,000 C’s Capital Account 36,000 The firm decided to admit D into the partnership for 1/5th of the future profits with the terms that D shall bring in a capital of OMR 60,000 and the Goodwill of the firm being valued at OMR 48,000 on 1.4.2020. The assets like Machinery, Land, Buildings and Plant are to be appreciated by 10% and Stock, Furniture, Premises are to be depreciated by 5%. Provision for Doubtful Debts to be made on Sundry debtors @ 5%, Discount on Creditors to be created against Sundry Creditors @ 2.5%, Provision for outstanding liability is also to be created at OMR 4,800 and Bank Loan is to be maintained. A, B and C sharing profits 3:2:1 as on 31.3.2020. Q5. Journalize the above transactions with narrations and prepare the Revaluation Account. Give your comment with reasons about the values which are debited and credited in the Revaluation Account. (2+2+1 = 5 Marks) Q6. Prepare Partners’ Capital Accounts and Balance Sheet of the reconstituted partnership firm. Give your views about the changes in the balance sheet after reconstitution.

Answer 1