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Question 100 Chapter 5 of +2-A
100. Following is the Balance Sheet of X and Y as at 31st March, 2019. Z is admitted as a partner on that date when the position of X and Y was:
| Liabilities | Assets | |||
| X's Capital | 10,000 | Cash in Hand | 9,000 | |
| Y's Capital | 8,000 | 18,000 | Debtors | 11,000 |
| Creditors | 12,000 | Stock | 12,000 | |
| General Reserve | 16,000 | Building | 8,000 | |
| Workmen Compensation Reserve | 4,000 | Machinery | 10,000 | |
| 50,000 | 50,000 |
X and Y share profits in the proportion of 3 : 2. The following terms of admission are agreed upon:
(a) Revaluation of assets: Building 18,000; Stock 16,000.
(b) The liability on Workmen Compensation Reserve is determined at 2,000. (c) Z brought in as his share of goodwill 10,000 in cash.
(d) Z was to bring in further cash as would make his capital equal to 20% of the combined capital of X and Y after above revaluation and adjustments are carried out.
(e) The further profit-sharing proportions were: X−2/5th, Y−2/5th and Z−1/5th.
Prepare new Balance Sheet of the firm and Capital Accounts of the Partners.
Revaluation Account
| Particular |
Amount | Particular | Amount | ||
|---|---|---|---|---|---|
| Building | (18,000 – 8,000) | 10,000 | |||
| Stock | (18,000 – 8,000) | 4,000 | |||
| Profit on Revaluation | |||||
| X Capita | 8,400 | ||||
| Y Capital | 5,600 | 14,000 | |||
| 14,000 | 14,000 | ||||
Partners’ Capital Account
| Parti culars |
X | Y | Z |
Partic |
X | Y | Z |
|---|---|---|---|---|---|---|---|
| By Balance B/d | 10,000 | 8,000 | - | ||||
| By General Reserve | 9,600 | 6,400 | - | ||||
| By Workmen’s Compensation Fund | 16,000 | - |
- |
||||
| By Premium for Goodwill | 10,000 | - | - | ||||
| By Revaluation | 8,400 | 5,600 | - | ||||
| To Balance c/d | 39,200 | 20,800 | - | ||||
| 39,200 | 20,800 | - | 39,200 | 20,800 | - | ||
| By Balance B/d | 39,200 | 20,800 | - | ||||
| By Bank A/c | - | - | 12,000 | ||||
| To Balance c/d |
39,200 |
20,800 |
12,000 |
||||
| 39,200 | 20,800 | 12,000 | 39,200 | 20,800 | 12,000 |
Balance Sheet
| Liabilities |
Amount | Assets | Amount | ||
|---|---|---|---|---|---|
| Creditors | 12,000 | Cash in Hand | 31,000 | ||
| Outstanding Workmen’s Compensation Claim | 2,000 | Debtors | 11,000 | ||
| Capital: | Stock | 16,000 | |||
| X | 39,200 | Building | 18,000 | ||
| Y | 20,800 | Machinery | 10,000 | ||
| Z | 12,000 | 72,000 | |||
| 2,18,640 | 2,18,640 | ||||
Working Note:-
Old Ratio X and Y = 3 : 1
Old Ratio X ,Y and Z = 2 : 2 : 1
Sacrificing Ratio = Old Ratio – New Ratio
| x's New Ratio | = | 3 | - | 2 |
| 5 | 5 |
| = | 3 - 2 |
| 5 |
| = | 1 |
| 5 |
| Y’s New Ratio | = | 2 | - | 2 |
| 5 | 5 |
| = | 2- 2 |
| 5 |
| = | 0 |
| 5 |
Only X is sacrificing 1/5 portion of profit in favor of Z. Therefore, amount of Premium for Goodwill will be taken by X only
Calculation of Z’s Capital
| Combined Capital of X and Y after all adjustments | = | 39,200 + 20,800 |
| = | 60,000 |
| Z’s Capital | = | 60,000 | X | 20 |
| 100 | ||||
| = | 12,000 |
Cash Account
| Particular |
Amount | Particular | Amount | ||
|---|---|---|---|---|---|
| Balance b/d | 9,000 | ||||
| Z’s Capital | 12,000 | ||||
| Premium for Goodwill | 10,000 | ||||
| Balance c/d | 31,000 | ||||
| 31,000 | 31,000 | ||||
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "Q.No.100 | Chapter 5 – Admission of Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1.
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