Question 58 Chapter 5 - Unimax Class 12 Part 1 - 2021

Stock, Plant and Machinery are worth 10% less than the book value. The market value of investments is Rs. 12000. Make a provision of 5% for bad and doubtful debts on debtors and a provision of 5% for discount on creditors.

Calculate new ratio, sacrificing ratio, and prepare Revaluation A/c, Capital A/cs and the Balance Sheet of the firm as newly constituted.

The solution of Question 58 Chapter 5 - Unimax Class 12 Part 1: -

 Revaluation A/c

Particulars		Rs.	Particulars	Rs.
To Stock a/c		770	By Investments a/c	9000
To Plant and Machinery a/c		1800	By Provision for creditors (5% on 6200)	310
To Provision for doubtful debts a/c (5% on 8800)		440
To Profit on revaluation a/c
X (3 : 2)	3780
Y	2520	6300
		9310		9310

  Capital Accounts

Particulars	X	Y	Z	Particulars	X	Y	Z
To X’s Capital a/c	-	-	2000	By Balance b/d	16800	13200	-
To Y’s Capital a/c	-	-	4000	By G.P. A/c	3000	2000	-
To Goodwill a/c	3000	2000	-	By Cash A/c	-	-	15000
To Balance c/d	26580	23720	8000	By Premium a/c	3000	4000	-
				By Z’s Capital a/c	3000	4000	-
				By Profit on revaluation	3780	2520	-
	29580	25720	15000		29580	25720	15000

  Balance Sheet

Liabilities		Rs.	Assets		Rs.
Bills Payable		3300	Stock		6930
Capital Accounts			Debtors	8800
X	26580		Less : Provision	440	8360
Y	23720		Cash (2000 + 15000 + 7000)		24000
Z	8000	58300	Plant and Machinery		16200
Creditors	6200		Investments		12000
Less : Provision for dis. On as	310	5890
		67490			67490

Working Note:

(A) Calculation of new PSR

X’s new share = 3/5 – (1/6 X 3/5) = 3/5 – 1/10 = 5/10
Y’s new share = 2/5 – (1/3 X 2/5) = 2/5 – 2/15 = 4/15
Z’s share = 1/10 + 2/15 = 7/30
New PSR = 15 : 8 : 7
Sacrificing Ratio
X’s sacrifice = 1/6 X 3/5 = 3/30
Y’s sacrifice = 1/3 X 2/5 = 2/15
S.R. = 3 : 4

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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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