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Question 53 Chapter 5 of +2-Part-1
53. (Hidden Goodwill)David & Bimal are partners in the firm sharing profits & losses in ratio 3:2 . On 31st March , 2018 their balance sheet was as under :
| Liabilities | Rs | Assets | Rs | ||
| Sundry creditors | 82,000 | Cash | 32,000 | ||
| General reserve | 3,000 | Stock | 15,000 | ||
| Capital Accounts | Debtors | 9,400 | |||
| David | 18,000 | Less reserve for doubtful debts | 400 | 9,000 | |
| Bimal | 12,000 | 30,000 | Building | 55,000 | |
| Furniture | 4,000 | ||||
| 1,15,000 | 1,15,000 |
They admitted Chander as a New Partner the new profit sharing ratio became 5: 3: 2 Chander introduced a capital of Rs.16,000. Chander was unable to bring any cash for Goodwill and so it was decided to value the Goodwill on the basis of his share in the profits and the capital contributed by him. The following revaluation were made at the time of Chander's admission.
(a) Stock had been overvalued by Rs. 750 and furniture by Rs. 500.
(b) Provision for doubtful debts to be increased by Rs. 100.
(c) A creditors for Rs. 2,350 was paid off by Bimal. Privately for which he was not to be reimbursed.
Prepare the Revaluation Account.
Partner's Capital Account and a Balance Sheet of the new firm on the date of Chander's admission. Show your working clearly.
We are providing a solution of Question 53 Chapter 5 of +2 Part-1 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 53 to 54 Chapter no. 5 class 12 of Usha publication. To check the direct solution of question no. 53 from the following video by using time stamps of the video.
Revaluation Account
| Particulars |
Amount | Particulars | Amount | ||
|---|---|---|---|---|---|
| To Stock A/c | 750 | By creditors A/c | 2,350 | ||
| To Furniture A/c | 500 | ||||
| To Provision for doubtful debts | 100 | ||||
| To profit transferred to | |||||
| - David 3/5 | 600 | ||||
| - Bimal 2/5 | 400 | 1,000 | |||
| 2,350 | 2,350 | ||||
Partners’ Capital Account
| Particulars | David | Bimal | Chander | Particulars | David | Bimal | Chander |
|---|---|---|---|---|---|---|---|
| By Balance b/d | 18,000 | 12,000 | |||||
| By Bank A/c | 16,000 | ||||||
| By Chander’s current A/c (profit) | 3,000 | 3,000 | |||||
| By Revaluation A/c | 600 | 400 | |||||
| By General reserve | 1,800 | 1,200 | |||||
| To Balance c/d | 23,400 | 16,600 | 16,000 | ||||
| 23,400 | 16,600 | 16,000 | 23,400 | 16,600 | 16,000 |
Balance Sheet
| Liabilities |
Amount | Assets | Amount | ||
|---|---|---|---|---|---|
| Creditors | 79,650 | Furniture | 3,500 | ||
| Capital Accounts | Building | 55,000 | |||
| David | 23,400 | Chander’s current A/C | 6,000 | ||
| Bimal | 16,600 | Stock | 14,250 | ||
| Chander | 16,000 | 56,000 | Debtors | 9,400 | |
| Less reserve for doubtful debts | 500 | 8,900 | |||
| Cash | 48,000 | ||||
| 1,35,650 | 1,35,650 | ||||
WORKING NOTES :
(i)Calculation of Hidden Goodwill
Total Capital of the firm basis of new partners = New partners capital X Reverse share of new partners
= 16,000 X 10/2 = 80,000
Adjusted Capital of David, Bimal & Chander’s capital (before goodwill)
| Combined Capital: | ||
| David | = | 20,400 |
| Bimal | = | 13,600 |
| Chander | = | 16,000 |
| = | 50,000 |
Value of goodwill = 80,000-50,000
= Rs. 30,000
(ii) Premium for goodwill (Chander) = 30,000X 2/10 = Rs 6,000
Journal entry for adjustment of goodwill
| Chander current A/c | Dr | 6,000 | |
| To David capital A/c | 3,000 | ||
| To Bimal’s capital A/c | 3,000 |
| David’s sacrifice Share | = | 3 | - | 5 |
| 5 | 10 | |||
| = | 1 | |||
| 10 |
| Bimal’s sacrifice Share | = | 2 | - | 3 |
| 5 | 10 | |||
| = | 1 | |||
| 10 |
SACRIFICING RATIO = 1 : 1
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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 "Question 53 Chapter 5 of +2 Part-1 - USHA Publication 12 Class Part - 1", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to USHA Publication +2 Part 1.
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24 September 2021
