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Question 54 Chapter 5 of Class 12 Part – 1 Usha Publication
54. ( Investment taken over by old partner) A & B are sharing profits in the ratio of 5:30 admit C as a partner with 1/3 share in profits. He has to contribute Rs. 25,000 as his capital. The balance sheet of A & B before admission was as follows.
| Liabilities | Rs | Assets | Rs | ||
| Creditors | 21,000 | Goodwill | 10,000 | ||
| Bills Payable | 6,000 | Land & Building | 25,000 | ||
| Capital Account | Plant & Machinery | 30,000 | |||
| A | 50,000 | Stock | 15,000 | ||
| B | 35,000 | 85,000 | Sundry Debtors | 20,000 | |
| General Reserve | 16,000 | Less Provision for Bad Debts | 1,500 | 18,500 | |
| Investments | 20,000 | ||||
| Cash | 9,500 | ||||
| 1,28,000 | 1,28,000 |
Other terms agreed upon were :
(i) Goodwill of the firm to be valued at Rs. 21,000.
(ii) Land and buildings were to be valued at Rs. 35,000 and plant and machinery at Rs. 25,000.
(iii) The provision for bad debts was found to be in excess by Rs. 400.
(iv) A liability for Rs. 1,000 included in sundry creditors was not likely to arise.
(v)Rs. 12,000 of the investments are to be taken over by A and B in their profit-sharing ratios.
(vi) B is to withdraw Rs. 3,400 in cash
Give journal entries to record the above transactions and show the balance sheet of the firm after C’s admission
We are providing a solution of Question 54 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 53 to 54 Chapter no. 5 class 12 of Usha publication. To check the direct solution of question no. 54 from the following video by using time stamps of the video.
Journal
| Date | Particulars |
L.F. | Debit | Credit | |
|---|---|---|---|---|---|
| 1 | Cash A/c | Dr. | 25,000 | ||
| To C’s Capital A/c | 25,000 | ||||
| (Being the cash brought in as capital) | |||||
| 2 | C’s Current A/c | Dr. | 7,000 | ||
| To A’s Capital A/c | 4,375 | ||||
| To B’s Capital A/c | 2,625 | ||||
| (Being goodwill adjusted through Current A/c) | |||||
| 3 | Land & Building A/c | Dr. | 10,000 | ||
| Provisional for doubtful debts A/c) | Dr. | 400 | |||
| Sundry Creditors A/c | Dr. | 1,000 | |||
| To Revaluation A/c | 11,400 | ||||
| (Being revaluation of assets recorded in the books) | |||||
| 4 | Revaluation A/c | Dr. | 5,000 | ||
| To Plant & Machinery A/c | 5,000 | ||||
| (Being decrease in the value of asset recorded in the books) | |||||
| 5 | Revaluation A/c | Dr. | 6,400 | ||
| To A’s Capital A/c | 4,000 | ||||
| To B’s Capital A/c | 2,400 | ||||
| (Being profit on revaluation distributed ) | |||||
| 6 | B’s Capital A/c | Dr. | 3,400 | ||
| To Cash A/c | 3,400 | ||||
| (Being drawings of B) | |||||
| 7 | General reserve A/c | Dr. | 16,000 | ||
| To A’s Capital A/c | 10,000 | ||||
| To B’s Capital A/c | 6,000 | ||||
| (Being General Reserve distributed among old partners) | |||||
| 8 | A’s Capital A/c | Dr. | 6,250 | ||
| B’s Capital A/c | Dr. | 3,750 | |||
| To Goodwill A/c | 10,000 | ||||
| (Being goodwill written off) | |||||
Partners’ Capital Account
| Particulars | A | B | C | Particulars | A | B | C |
|---|---|---|---|---|---|---|---|
| To Cash A/c | 3,400 | By Balance b/d | 50,000 | 35,000 | |||
| To Investment A/c | 7,500 | 4,500 | By Cash A/c | 25,000 | |||
| To Goodwill A/c | 6,250 | 3,750 | By C’s Current A/c | 4,375 | 2,625 | ||
| By Revaluation A/c | 4,000 | 2,400 | |||||
| By General reserve | 10,000 | 6,000 | |||||
| To Balance c/d | 54,625 | 34,375 | 25,000 | ||||
| 68,375 | 46,025 | 25,000 | 68,375 | 46,025 | 25,000 |
Balance Sheet
| Liabilities |
Amount | Assets | Amount | ||
|---|---|---|---|---|---|
| Creditors | 20,000 | Land & Building | 35,000 | ||
| Bills Payable | 6,000 | Plant & Machinery | 25,000 | ||
| Capital Account | Stock | 15,000 | |||
| A | 54,625 | Sundry Debtors | 20,000 | ||
| B | 34,375 | Less Provision for Bad Debts | 1,100 | 18,900 | |
| C | 25,000 | Investments | 8,000 | ||
| C’s current A/c | 7,000 | ||||
| Cash | 31,100 | ||||
| 1,40,000 | 1,40,000 | ||||
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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