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Question 59 Chapter 5 of Class 12 Part – 1 Usha Publication
59. (Adjustment of the capital on the basis of NPS ) a & b sharing profit in the proportion of three fourth and one fourth showed the following as their balance sheet on 31ST MARCH, 2018
| Liabilities | Rs | Assets | Rs | |
| Creditors | 37,500 | Cash at bank | 22,500 | |
| General Reserve | 4,000 | Bills receivable | 3,000 | |
| Capital Accounts | Debtors | 16,000 | ||
| A | 30,000 | Stock | 20,000 | |
| B | 16,000 | 46,000 | Office Furniture | 1,000 |
| Land & Building | 25,000 | |||
| 87,500 | 87,500 |
They admit C into the partnership on 1st April 2018 on the following terms:
1. That C pays Rs. 10,000 as his capital for a fifth share in the future profits.
2. That goodwill account is valued at Rs. 20,000.
3. That furniture is reduced by 10% and a reserve for doubtful debts be created at 5% on debtors.
4. That the value of land and building be appreciated by 20%.
5. That the capital accounts of all the partners be readjusted on the basis of their profit-sharing arrangements and additional amounts be debited or credited to their current accounts.
6. Interest payable is Rs. 2,000.
Open the necessary accounts to give effect to the above-mentioned items and also give the opening balance sheet of the new firm.
We are providing a solution of Question 59 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 59 to 60 Chapter no. 5 class 12 of Usha publication. To check the direct solution of question no. 59 from the following video by using time stamps of the video.
Revaluation account
| Particulars |
Amount | Particulars | Amount | ||
|---|---|---|---|---|---|
| To Furniture A/c | 100 | By Land & Buildings A/c | 5,000 | ||
| To Reserve of doubtful debts | 800 | ||||
| To Interest payable A/c | 2,000 | ||||
| To Profit on revaluation transferred to Capital accounts | |||||
| A 3/4 | 1,575 | ||||
| B 1/4 | 525 | 2,100 | |||
| 5,000 | 5,000 | ||||
Partners’ Capital Account
| Particulars | A | B | C | Particulars | A | B | C |
|---|---|---|---|---|---|---|---|
| To Current A/c | 7,575 | 8,525 | By Balance b/d | 30,000 | 16,000 | ||
| By Bank A/c | 10,000 | ||||||
| By C’s Current A/c | 3,000 | 1,000 | |||||
| By Revaluation A/c | 1,575 | 525 | |||||
| By General reserve | 3,000 | 1,000 | |||||
| To Balance c/d | 30,000 | 10,000 | 10,000 | ||||
| 37,575 | 18,525 | 10,000 | 37,575 | 18,525 | 10,000 |
Balance Sheet
| Liabilities |
Amount | Assets | Amount | ||
|---|---|---|---|---|---|
| Creditors | 37,500 | 32,500 | |||
| Capital Accounts | 16,000 | ||||
| A | 30,000 | 800 | 15,200 | ||
| B | 10,000 | 3,000 | |||
| C | 10,000 | 20,000 | |||
| Current Accounts | 900 | ||||
| A | 7,575 | 30,000 | |||
| B | 8,525 | 16,100 | 4,000 | ||
| Payable interest | 2,000 | ||||
| 1,05,600 | 1,05,600 | ||||
WORKING NOTES :
1. Calculation of new profit share ratio
Let total profits of the firm = Re 1
| Share of profit acquired by C | = | 1 |
| 5 |
| Remaining share (Joint share of A and B) | = | 1 | - | 1 |
| 5 | ||||
| = | 4 | |||
| 5 |
| A‘s new share | = | 4 | x | 3 |
| 5 | 5 | |||
| = | 3 | |||
| 5 |
| B‘s new share | = | 4 | x | 1 |
| 5 | 4 | |||
| = | 1 | |||
| 5 |
New profit sharing ratio = 3: 1: 1
Sacrificing ratio = 3 : 1
Calculation of Total Capital after C’s Admission
= C’s Capital X Reverse of C’s share
| Total Capital in new firm | = | 10,000 | x | 5 |
| 1 | ||||
| = | Rs. 50,000 |
Total Capital distribute among all partners in new profit sharing ratio
| A's new Capital | = | 50,000 | x | 2 |
| 5 | ||||
| = | Rs. 30,000 |
| B's new Capital | = | 50,000 | x | 1 |
| 5 | ||||
| = | Rs. 10,000 |
| C's new Capital | = | 50,000 | x | 1 |
| 5 | ||||
| = | Rs. 10,000 |
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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