(a) Charles, Muthu and Sekar are partners, sharing profits in the ratio of 3 : 4 : 2. Their balance sheet as on 31st December, 2018 is as under : | Liabilities | ₹ | Assets | ₹ | | --- | --- | --- | --- | | Capital accounts: Charles 30,000; Muthu 40,000; Sekar 20,000 | 90,000 | Furniture | 20,000 | | Sundry creditors | 33,000 | Stock | 40,000 | | | | Debtors | 30,000 | | | | Cash at bank | 33,000 | | | 1,23,000 | | 1,23,000 | On 1.1.2019, Charles retired from the partnership firm on the following arrangements : (i) Stock to be appreciated by 10%. (ii) To provide ₹ 1,300 for bad debts. (iii) The final amount due to Charles was paid immediately. Prepare revaluation account, partner's capital account and the balance sheet of the firm after retirement. OR (b) From the following trading activities of Naveen Ltd., calculate : (i) Gross Profit Ratio (ii) Operating Cost Ratio (iii) Operating Profit Ratio Statement of Profit and Loss | Particulars | ₹ | | --- | --- | | I Revenue from operations | 20,000 | | II Other income: Income from investments | 200 | | III Total revenues (I + II) | 20,200 | | IV Expenses: | | | Purchase of stock-in-trade | 17,000 | | Changes in inventories | (-) 1,000 | | Finance costs | 300 | | Other expenses (administration and selling) | 2,400 | | Total expenses | 18,700 | | V Profit before tax (III - IV) | 1,500 |

> > [!TLDR] > (a) Revaluation profit Rs. 2,700 (3:4:2); Charles is paid Rs. 30,900 immediately and the new Balance Sheet totals Rs. 94,800. (b) Gross profit ratio 20%, operating cost ratio 92%, operating profit ratio 8%. > > **PART (a) - Charles, Muthu and Sekar (Retirement of Charles)** > > Stock appreciated 10% = 40,000 x 10% = 4,000 (gain); provision for bad debts 1,300 (loss). > > **Revaluation Account** > > | Dr (Losses) | Rs. | Cr (Gains) | Rs. | > | --- | --- | --- | --- | > | To Provision for bad debts A/c | 1,300 | By Stock A/c | 4,000 | > | To Profit transferred to: | | | | > | Charles (3/9) | 900 | | | > | Muthu (4/9) | 1,200 | | | > | Sekar (2/9) | 600 | | | > | | **4,000** | | **4,000** | > > **Partners' Capital Accounts** > > | Particulars | Charles (Rs.) | Muthu (Rs.) | Sekar (Rs.) | Particulars | Charles (Rs.) | Muthu (Rs.) | Sekar (Rs.) | > | --- | --- | --- | --- | --- | --- | --- | --- | > | To Bank A/c (final payment) | 30,900 | - | - | By Balance b/d | 30,000 | 40,000 | 20,000 | > | To Balance c/d | - | 41,200 | 20,600 | By Revaluation A/c (profit) | 900 | 1,200 | 600 | > | | **30,900** | **41,200** | **20,600** | | **30,900** | **41,200** | **20,600** | > > **Balance Sheet after retirement (as on 1.1.2019)** > > | Liabilities | Rs. | Assets | Rs. | > | --- | --- | --- | --- | > | Capital accounts: Muthu 41,200; Sekar 20,600 | 61,800 | Furniture | 20,000 | > | Sundry creditors | 33,000 | Stock 40,000 + 4,000 | 44,000 | > | | | Debtors 30,000 - 1,300 provision | 28,700 | > | | | Cash at bank 33,000 - 30,900 | 2,100 | > | | **94,800** | | **94,800** | > > **PART (b) - Naveen Ltd.: Ratios** > …

(a) Charles, Muthu and Sekar are partners, sharing profits in the ratio of 3 : 4 : 2. Their balance sheet as o

Question 13 of 35

(a) Charles, Muthu and Sekar are partners, sharing profits in the ratio of 3 : 4 : 2. Their balance sheet as on 31st December, 2018 is as under :

Liabilities	₹	Assets	₹
Capital accounts: Charles 30,000; Muthu 40,000; Sekar 20,000	90,000	Furniture	20,000
Sundry creditors	33,000	Stock	40,000
		Debtors	30,000
		Cash at bank	33,000
	1,23,000		1,23,000

On 1.1.2019, Charles retired from the partnership firm on the following arrangements :

Stock to be appreciated by 10%.
To provide ₹ 1,300 for bad debts.
The final amount due to Charles was paid immediately. Prepare revaluation account, partner's capital account and the balance sheet of the firm after retirement. OR

(b) From the following trading activities of Naveen Ltd., calculate :

(i) Gross Profit Ratio

(ii) Operating Cost Ratio

(iii) Operating Profit Ratio

Statement of Profit and Loss

Particulars	₹
I Revenue from operations	20,000
II Other income: Income from investments	200
III Total revenues (I + II)	20,200
IV Expenses:
Purchase of stock-in-trade	17,000
Changes in inventories	(-) 1,000
Finance costs	300
Other expenses (administration and selling)	2,400
Total expenses	18,700
V Profit before tax (III - IV)	1,500

Puducherry TnboardTamil Nadu HSC (DGE) Commerce Board 2020Subjective· 5mImportance★★★★★

37% · 13/35 Questions

🔒 Locked · start free trial →

You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.

Start your 14-day free trial to unlock the full solution →

(a) Revaluation profit Rs. 2,700 (3:4:2); Charles is paid Rs. 30,900 immediately and the new Balance Sheet totals Rs. 94,800. (b) Gross profit ratio 20%, operating cost ratio 92%, operating profit ratio 8%.

PART (a) - Charles, Muthu and Sekar (Retirement of Charles)

Stock appreciated 10% = 40,000 x 10% = 4,000 (gain); provision for bad debts 1,300 (loss).

Revaluation Account

Dr (Losses)	Rs.	Cr (Gains)	Rs.
To Provision for bad debts A/c	1,300	By Stock A/c	4,000
To Profit transferred to:
Charles (3/9)	900
Muthu (4/9)	1,200
Sekar (2/9)	600
	4,000		4,000

Partners' Capital Accounts

Particulars	Charles (Rs.)	Muthu (Rs.)	Sekar (Rs.)	Particulars	Charles (Rs.)	Muthu (Rs.)	Sekar (Rs.)
To Bank A/c (final payment)	30,900	-	-	By Balance b/d	30,000	40,000	20,000
To Balance c/d	-	41,200	20,600	By Revaluation A/c (profit)	900	1,200	600
	30,900	41,200	20,600		30,900	41,200	20,600

Balance Sheet after retirement (as on 1.1.2019)

Liabilities	Rs.	Assets	Rs.
Capital accounts: Muthu 41,200; Sekar 20,600	61,800	Furniture	20,000
Sundry creditors	33,000	Stock 40,000 + 4,000	44,000
		Debtors 30,000 - 1,300 provision	28,700
		Cash at bank 33,000 - 30,900	2,100
	94,800		94,800

PART (b) - Naveen Ltd.: Ratios

…

Start your 14-day free trial to unlock the full solution →

←Previous questionQ2 — On retirement of a partner from a partnership firm, accumulated profit…→Next questionQ4 — What is meant by retirement of a partner ?

🎓Unlock everything free for 14 days

Unlock everything free for 14 days