Question 42 Chapter 5 - Unimax Class 12 Part 1 - 2021

Question 42 Chapter 5 - Unimax Class 12 Part 1 - 2021

42. M and N are partners in a firm sharing profits and losses in the ratio of 5 : 3. On 31st December, 2020 their Balance Sheet was as under :

Liabilities	Amount	Assets	Amount
Sundry Creditors	4,000	Machinery	12,000
Bills Payable	2,000	Stock	8,000
Capital		Sundry Debtors	7,200
M	12,000	Bank Balance	500
N	10,000	Cash in Hand	300
	28,000		28,000

On the above date the partners decided to admit R as a partner on the following terms :
The new profit sharing ratio among M, N and R will be 7 : 5 : 4 respectively.
R will bring Rs. 8000 as his capital and Rs. 4000 for his share of goodwill.
M and N will withdraw half of the goodwill in cash.
Machinery is to be valued at Rs. 15000 ; stock at Rs. 10000 and Provision for bad debts of Rs. 1000 is to be created.
There is a liability of Rs. 2000 being the outstanding salary payable to employees of the firm.
This liability is not included in the creditors.
Partners decide to show this liability in the books of accounts of the new firm. Prepare Revaluation Account, partners’ capital accounts and the Balance Sheet.

The solution of Question 42 Chapter 5 - Unimax Class 12 Part 1

  Revaluation A/c

Particulars		Rs.	Particulars	Rs.
To Provision for bad debts		1000	By Machinery A/c	3000
To Outstanding Salary A/c		2000	By Stock A/c	2000
To Profit on revaluation a/c
M (2000 X 5/8)	1250
N (2000 X 3/8) ( 5 : 3)	750	2000
		5000		5000

Capital Accounts

Particulars	M	N	R	Particulars	M	N	R
To Cash A/c	1500	500	-	By Balance b/d ( capital introduced	12000	10000	-
To Balance b/d	14750	11250	8000	By Cash A/c	-	-	8000
				By Premium A/c	3000	1000	-
				By Profit on Revaluation a/c	1250	750	-
	16250	11750	8000		16250	11750	8000

  Balance Sheet

Particulars		Rs.	Particulars	Rs.
Sundry Creditors		4000	Machinery	15000
Bills Payable		2000	Stock	10000
To out salary		2000	Sundry debtors	6200
Capital Accounts			Bank Balance	500
M :	14750		Cash	10300
N :	11250
R :	8000	34000
		42000		42000

Working Note
Old Share – New share
M’s sacrifice = Old share – new share
                     = 5/8 -7/16
                     = 3/16
N’s sacrifice = 3/8 -5/16
                    = 1/16
S.R. = 3 : 1 = Rs. 4000
A : B = 3000 : 1000

 

https://tutorstips.com/what-is-partnership/

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

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication