Question 63 Chapter 5 - Unimax Class 12 Part 1 - 2021

1. To transfer Rs. 2000 from Suresh’s Current A/c (newly opened) to old partners’ capital A/cs for share of goodwill (Suresh is unable to bring goodwill in cash).
   
2. To create a reserve at 10% on the debtors for doubtful debts.
   
3. To write down Fixtures to Rs. 100.
   
4. To depreciate Stock by 10%.
5. To increase the value of investments to Rs. 3500.

The capitals of the partners were to be adjusted in profit sharing ratio. Make entries necessary to give effect to the above arrangement and prepare the amended Balance Sheet immediately after Suresh has become a partner.

The solution of Question 63 Chapter 5 - Unimax Class 12 Part 1: -

Journal

Date	Particulars		L.F.	Debit	Credit
	Investments a/c	Dr.		500
	To Revaluation A/c				500
	(Being value of assets increased)
	Revaluation a/c	Dr.		1290
	To Provision for doubtful debts a/c				575
	To Furniture a/c				300
	To Stock a/c				415
	(Being value of asset decreased & liabilities increased)
	Ramesh’s Capital a/c	Dr.		474
	Rahim’s Capital A/c	Dr.		316
	To Revaluation a/c				790
	(Being loss on revaluation transferred to old partner’s capital a/c in old ratio)
	Suresh’s Current a/c			2000
	To Ramesh’s Capital A/c				1200
	To Rahim’s Capital a/c				800
	(Being amount of goodwill transferred to old partners’ capital a/c from Suresh’s current a/c
	Cash a/c	Dr.		1242
	To Suresh’s Capital A/c				1242
	(Being capital introduced by new partner)
	Cash a/c	Dr.		200
	To Ramesh’s Capital A/c				200
	(Being capital introduced by old partner)
	Rahim’s Capital a/c	Dr.		200
	To Cash A/c				200
	(Being capital withdrawn by old partner from the business)

Revaluation A/c

Particulars	Rs.	Particulars		Rs.
To Provision for bad debts a/c	575	By Investments a/c		500
To Furniture a/c	300	By Loss on revaluation
To Stock a/c	415	Ramesh ( 3 : 2 )	474
		Rahim	316	790
	1290			1290

Capital Accounts

Particulars	Ramesh	Rahim	Suresh	Particulars	Ramesh	Rahim	Suresh
To Loss on revaluation	474	316	-	By Balance b/d	2,800	2,200	-
To Cash a/c	-	200	-	By Suresh current a/c	1,200	800	-
To Balance c/d	3,726	2,484	1,242	By Cash a/c	200	-	-
				By Cash a/c	-	-	1,242
	4,200	3,000	1,242		4,200	3,000	1,242

Balance Sheet

Liabilities		Rs.	Assets		Rs.
Bank overdraft		4841	Suresh current a/c		2,000
Capital Accounts			Debtors	5,750
Ramesh	3726		Less : Provision	575	5,175
Rahim	2484		Cash (100 + 1242 + 200 -200)		1,342
Suresh	1242	7452	Investments		3,500
Suresh		3559	Stock		3,735
			Fixtures		100
		15,852			15,852

Working Note:

Sacrificing Ratio = 3 : 2 if nothing has been mentioned in partnership deed except new partner’s share (it is assumed)

(A) Calculation of Capital contributions by partners :

Total Capital of firm = (Ramesh capital balance c/d + Rahim’s capital balance c/d) X 6/5

= (3526 + 2684) X 6/5
= Rs. 7452

(i) Ramesh’s required capital = 3/6 X 7452 = Rs. 3726

Ramesh’s actual capital = Rs. 3526

Ramesh’s will introduce Rs. 200 in business

(ii) Rahim’s required capital = Rs. 2/6 X 7452 = Rs. 2484

Rahim’s actual capital = Rs. 2684
Rahim’s will withdraw Rs. 200 from business

(iii) Suresh’s capital = 1/6 X 7452 = Rs. 1242

(B) New PSR :

Let total share = 1
Suresh share = 1/6 Remaining share = 1 – 1/6 = 5/6
Ramesh’s new share = 3/5 X 5/6 = 3/6
Rahim’s new share = 2/5 X 5/6 = 2/6
Suresh’s share = 1/6

New PSR = 3 : 2 : 1 Ans.

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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

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication