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Question 48 Chapter 5 of Class 12 Part – 1 Usha Publication
48. (Revaluation A/c/Partner‘s Cap A/c/B/S) L and M share the profits of a business in the Ratio 5:3. They admit N into partnership for ¼ share in the profits to be contributed equally by L and M. On the date of admission the balance sheet of the firm was as follows:
| Liabilities | Rs | Assets | Rs |
| L’s Capital | 30,000 | Machinery | 26,000 |
| M’s Capital | 20,000 | Furniture | 18,000 |
| Workmen’s Compensation fund | 4,000 | Stock | 10,000 |
| Bank Loan | 12,000 | Debtors | 8,000 |
| Creditors | 2,000 | Bank | 6,000 |
| 68,000 | 68,000 |
Terms of M’s admission were as follows:
(i) N will bring Rs. 25,000 as his capital.
(ii) Goodwill of the firm is to be valued at 4 years purchase of the average super-profits of last 3 years. Average profits of last 3 years were at Rs. 20,000, while the normal profits that can be earned with the capital employed are Rs. 12,000. No goodwill is to be raised in the books of the firm.
(iii) Furniture is to be appreciated by Rs. 6,000 and the value of a stock to be reduced by 20%
Prepare Revaluation Account, Partners Capital Accounts, and Balance Sheet of the new firm.
We are providing a solution of Question 48 Chapter 5 of Class 12 Part – 1 Usha Publication in two formats. one is in Video format and another is in article format. Check out both formats as follows:
The video consists solution of question numbers from 48 to 50 Chapter no. 5 class 12 of Usha publication. To check the direct solution of question no. 48 from the following video by using time stamps of the video.
Revaluation Account
| Particulars |
Amount | Particulars | Amount | ||
|---|---|---|---|---|---|
| To Stock | 2,000 | By Furniture | 6,000 | ||
| To profit on Revaluation | |||||
| - L 5/8 | 2,500 | ||||
| - M 3/8 | 1,500 | 4,000 | |||
| 6,000 | 6,000 | ||||
| Partners’ Capital Account |
|||||||
| Particulars | L | M | N | Particulars | L | M | N |
|---|---|---|---|---|---|---|---|
| By Balance b/d | 30,000 | 20,000 | |||||
| By W. C. R A/c | 2,500 | 1,500 | |||||
| By Revaluation A/c | 2,500 | 1,500 | |||||
| By Bank A/c | 25,000 | ||||||
| By N’s Current A/c | 4,000 | 4,000 | |||||
| To Balance c/d | 39,000 | 27,000 | 25,000 | ||||
| 39,000 | 27,000 | 25,000 | 39,000 | 27,000 | 25,000 | ||
Balance Sheet
| Liabilities |
Amount | Assets | Amount | ||
|---|---|---|---|---|---|
| Workmen’s Compensation fund | 4,000 | Machinery | 26,000 | ||
| Bank Loan | 12,000 | Furniture | 24,000 | ||
| Creditors | 2,000 | Stock | 8,000 | ||
| L’s Capital | 39,000 | Debtors | 8,000 | ||
| M’s Capital | 27,000 | N’s Current A/c | 8,000 | ||
| N’s Capital | 25,000 | 91,000 | Bank(6000+25000) | 31,000 | |
| 1,05,000 | 1,05,000 | ||||
Working Notes:
Goodwill :
| Rs | ||
| Average Profits | = | 20,000 |
| Normal Profits | = | 12,000 |
| Super Profits = (Average – Normal)Profits | ||
| = | 20,000 - 12,000 | |
| = | 8,000 | |
| Goodwill | = | Super Profit X Years of Purchase |
| = | 8,000 x 4 | |
| = | 32,000 |
| N’s Share of Goodwill | = | 32,000 | X | 1 |
| 4 | ||||
| = | 8,000 |
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.
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