Question : A, B and C were partners, sharing profits and losses in the ratio of 2:2:1. B retired on 31st March 2020. On the date of his retirement, some of the assets and liabilities appeared in the books as follows:
Creditors Rs. 70,000; Building Rs. 1,00,000; Plant and Machinery Rs. 40,000; Stock of Raw Materials Rs. 20,000; Stock of Finished Goods Rs. 30,000, Debtors Rs.20,000.
Following was agreed among the partners on B's retirement:
(a) Building to be appreciated by 20%.
(b) Plant and Machinery to be reduced by 10%.
(c) A Provision of 5% on Debtors to be created for Doubtful Debts.
(d) Stock of Raw Materials to be valued at Rs. 18,000 and Finished Goods at Rs. 35,000.
(e) An Old Computer previously written off was sold for Rs. 2,000 as scrap.
(f) Firm had to pay Rs. 5,000 to an injured employee.
Question: Revaluation profit is
Option 1: 20,000
Option 2: 17,000
Option 3: 15,000
Option 4: None of these
Correct Answer: 15,000
Solution : Answer = 15,000
Revaluation A/c
| To Plant | 4000 | By Building | 20,000 |
| To Provisions for Doubtful Debt | 1000 | By Stock of Finished Goods | 5000 |
| To Stock of Firm Material | 2000 | ||
| To Bank | 5000 | By Bank | 2000 |
| To Profit | 15,000 | ||
| 27000 | 27000 |
Hence, the correct option is 3.
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