Question : X, Y and Z are partners in a firm sharing profits and losses in the ratio of 4 : 3: 1. As per the terms of the Partnership deed on the death of any partner, the Goodwill of the deceased partner was to be valued at 50% of the net profits credited to that Partner’s Capital A/c during the last three completed years before her death. Books are closed on 31st December each year. X died on 29th February 2016. The profits for the last five years were :
2011 — Rs.60,000, 2012 — Rs.97,000, 2013 — Rs.1,05,000, 2014 — Rs.30,000 and 2015 —Rs.84,000.
On the date of X’s death, the Building was found under valued at Rs.80,000, which was to be considered. The new profit-sharing ratio between Y and Z will be equal.
Q. If the Revaluation profit/loss occurs, X's capital account should be debited/credited by Rs -----
Option 1: Debited by Rs 40,000
Option 2: Credited by Rs 40,000
Option 3: Credited by Rs 20,000
Option 4: Debited by Rs 20,000
Correct Answer: Credited by Rs 40,000
Solution : Answer = Credited by Rs 40,000
Revaluation A/C
|
To Profit |
By Building A/c | 80,000 | |
|
X= 4/8 × 80,000
= 40,000 |
|||
|
Y= 3/8 × 80,000
= 30,000 |
|||
|
Z= 1/8 × 80,000
= 10,000 |
|||
| 80,000 | 80,000 |
Revaluation A/C Dr. 40,000
To X's Capital A/C 40,000
Hence, the correct option is 2.
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