Q.No.101 | Chapter 5 – Admission of Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 101 Chapter 5 of +2-A

101. Kalpana and Kanika were partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2019, they admitted Karuna as a new partner for 1/5th share in the profits of the firm. The Balance Sheet of Kalpana and Kanika as on 1st April, 2019 was as follows:

Liabilities			Assets
Capital A/cs:			Land and Building		2,10,000
Kalpana	4,80,000		Plant		2,70,000
Kanika	2,10,000	6,90,000	Stock		2,10,000
General Reserve		60,000	Debtors	1,32,000
Workmen's Compensation Fund		1,00,000	Less: Provision	12,000
Creditors		90,000	Cash		1,30,000
		9,40,000			9,40,000

It was agreed that:
(a)the value of Land and Building will be appreciated by 20%.
(b) the value of plant be increased by 60,000.
(c) Karuna will bring 80,000 for her share of goodwill premium.
(d) the liabilities of Workmen's Compensation Fund were determined at 60,000.
(e) Karuna will bring in cash as capital to the extent of 1/5th share of the total capital of the new firm. Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm

 

 

The solution of Question 101 Chapter 5 of +2-A: -

 

Revaluation Account

Particular		Amount	Particular		Amount
			Land and Building A/c		42,000
			Plant A/c		60,000
Profit on Revaluation
Kalpana’s Capital A/c	61,200
Kanika’s Capital A/c	40,800	1,02,000
		1,02,000			1,02,000

 

Partners’ Capital Account

Parti culars	Kalpana	Kanika	Karuna	Partic ulars	Kalpana	Kanika	Karuna
				By Balance B/d	4,80,000	2,10,000	-
				By Cash	-	-	2,43,000
				By General Reserve	36,000	24,000	-
				By Workmen’s Compensation Fund	24,000	16,000	-
				By Premium for Goodwill	48,000	32,000	-
				By Revaluation	61,200	40,800	-
To Balance c/d	6,49,200	3,22,800	2,43,000
	6,49,200	3,22,800	2,43,000		6,49,200	3,22,800	2,43,000

 

Balance Sheet

Liabilities		Amount	Assets		Amount
Creditors		90,000	Cash in Hand		4,53,000
Liability for Workmen Compensation		60,000	Debtors	1,32,000
Capital:			Less: Provision for debtors	12,000	1,20,000
Kalpana	6,49,200		Stock		2,10,000
Kanika	3,22,800		Land and Building		2,52,000
Karuna	2,43,000	12,15,000	Plant		3,30,000
		13,65,000			13,65,000

 

Working Note:-

Karuna is admitted for 1/5th share

Let the total share of the business = 1

Remaining share	=	1	-	1
				5

=	5 - 1
	5

=	4
		5

To Calculate to New Ratio distribute the remaining share in the old ratio of old partners’

New Ratio = Combined share of Kalpana and Kanika X Old Ratio

Kalpana's Share	=	4	X	3
		5		5

=	12
		25

 

Kanika's Share	=	4	X	2
		5		5

=	8
		25

New Profit sharing Ratio = 12 : 8 : 5

Calculation of Sacrificing Ratio

Kalpana's Share	=	3	-	12
		5		15

=	15 -12
	25

=	3
		25

 

Kanika	=	2	-	8
		5		25

=	10- 8
	25

=	2
		25

 

Sacrificing Ratio = 3 : 2

Calculate of Karuna's Capital

 

Adjusted Capital of Kalpana	=	6,49,200
Adjusted Capital of Kanika	=	3,22,800
Total Adjusted Capital	=	9,72,000 (6,49,200+3,22,800)

Karuna's Capital = Total Adjusted Capital X Karna’s Profit Share X Reciprocal of combined new Share of Old Partner

Karuna’s Share of Goodwill	=	9,72,000	x	1	x	5
				5		4
	=	2,43,000

 

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
• Chapter No. 3 – Goodwill: Nature and Valuation
• Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 – Admission of a Partner
• Chapter No. 6 – Retirement/Death of a Partner
• Chapter No. 7 – Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 8 – Company Accounts –  Accounting for Share Capital
• Chapter No. 9 – Company Accounts – Issue of Debentures
• Chapter No. 10 – Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 – Financial Statements of a Company
• Chapter No. 2 – Financial Statement Analysis 
• Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
• Chapter No. 4 – Accounting Ratios
• Chapter No. 5 – Cash Flow Statement

 

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