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Question 63 Chapter 5 of Class 12 Part – 1 Usha Publication
63. (Adjustment of the capital/goodwill/revaluation A/c/ partner’s capital A/c balance sheet) A firm has two partners B & C , sharing profits in the ratio of 3:2. they admit A into the firm on 1-4-2016when the balance sheet of the firm was as follows :
| Liabilities | Rs. | Assets | Rs. |
| B’s capital A/c | 30,000 | Cash | 2,000 |
| C’s capital A/c | 10,000 | Debtors | 4,000 |
| Profit & loss A/c | 7,500 | Stock | 6,000 |
| Creditor | 7,000 | Investments | 9,000 |
| Bills payable | 2,500 | Furniture | 18,000 |
| Machinery | 18,000 | ||
| 57,000 | 57,000 |
Terms of A's admission were as follows:
(i) A is to bring Rs. 20,000 as his capital for a 1/3rd share of profit and Rs. 3,500 as his share of Goodwill.
(ii) Value of machinery and stock are to be reduced by Rs. 7,000 and Rs. 1,000 respectively and the value of furniture to be increased by Rs. 3,000. (iii) Capital of the partners shall be proportionate to their profits sharing ratio, taking A's capital as a base. Excess capital is to be withdrawn in cash by the partner concerned and the deficiency is to be made up by bringing cash.
Prepare Revaluation Account, Partner's Capital Accounts, and the Balance Sheet of the firm after the above adjustments.
We are providing a solution of Question 63 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 63 to 64 Chapter no. 5 class 12 of Usha publication. To check the direct solution of question no. 63 from the following video by using time stamps of the video.
Revaluation account
| Particulars |
Amount | Particulars | Amount | ||
|---|---|---|---|---|---|
| To Machinery A/c | 7,000 | By furniture A/c | 3,000 | ||
| To Stock A/c | 1,000 | ||||
| By loss on revaluation transferred to | |||||
| B’s capital A/c | 3,000 | ||||
| C’s capital A/c | 2,000 | 5,000 | |||
| 8,000 | 8,000 | ||||
Partners’ Capital Account
| Particulars | B | C | A | Particulars | B | C | A |
|---|---|---|---|---|---|---|---|
| To Revaluation A/c | 3,000 | 2,000 | By Balance b/d | 30,000 | 10,000 | ||
| To Cash A/c | 9,600 | By Cash A/c | 20,000 | ||||
| By P & L A/c | 4,500 | 3,000 | |||||
| By premium for Goodwill A/c | 2,100 | 1,400 | |||||
| By cash A/c | 3,600 | ||||||
| To Balance c/d | 24,000 | 16,000 | 20,000 | ||||
| 36,600 | 18,000 | 20,000 | 36,600 | 18,000 | 20,000 |
Balance Sheet
| Liabilities |
Amount | Assets | Amount | ||
|---|---|---|---|---|---|
| Creditors | 7,000 | Cash (2000+20000+3600-9600+3500) | 19,500 | ||
| Bills payable | 2,500 | Machinery | 11,000 | ||
| Capital Accounts | Furniture (18000+3000) | 21,000 | |||
| B | 24,000 | Investment | 9,000 | ||
| C | 16,000 | Stock | 5,000 | ||
| A | 20,000 | 60,000 | Debtors | 4,000 | |
| 69,500 | 69,500 | ||||
WORKING NOTES :
1. Calculation of New profit sharing Ratio
| A’s share | = | 1 |
| 3 |
| Remaining share for A,B, and C | = | 1 | - | 1 |
| 3 | ||||
| = | 2 | |||
| 3 |
Remaining share distributed among B and C in old profit sharing ratio
| B‘s share | = | 2 | x | 3 |
| 3 | 5 | |||
| = | 6 | |||
| 15 |
| C‘s share | = | 2 | x | 2 |
| 3 | 5 | |||
| = | 4 | |||
| 15 |
| A‘s share | = | 1 | x | 5 |
| 3 | 5 | |||
| = | 5 | |||
| 15 |
New profit sharing ratio = 6 : 4 : 5
ii. Calculation of New Capital of B and C
Calculation of Total Capital of new firm
= A’s Capital X Reverse of A’s share
| Total capital | = | 20,000 | x | 3 |
| 1 | ||||
| = | 60,000 |
Total Capital distribute among all partners in new profit sharing ratio:-
| B’s New Capital | = | 60,000 | x | 6 |
| 15 | ||||
| = | 24,000 |
| C’s New Capital | = | 60,000 | x | 4 |
| 15 | ||||
| = | 16,000 |
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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