Question 65 Chapter 5 - Unimax Class 12 Part 1 - 2021

Question 65 Chapter 5 - Unimax Class 12 Part 1 - 2021

65. A and B share profits in the proportion of 3 : 1. Their Balance Sheet on 31st December, 2020 was as follows :

Liabilities	Amount	Assets	Amount
Sundry Creditors	41,500	Cash at Bank	26,500
Capital :		B/R	3,000
A	30,000	Debtors	16,000
B	16,000	Stock	20,000
Reserve Fund	4,000	Fixtures	1,000
		Land and Building	25,000
	91,500		91,500

On 1st January, 2021, C was admitted into partnership for 1/4th share on the following terms :

1. C will bring in proportionate capital.
   
2. Building is to be appreciated by Rs. 7000 and fixture is to be depreciated by Rs. 300.
   
3. The provision for debtors is to be created at the rate of 5%.
   
4. The goodwill of the firm has been valued at Rs. 16400 but C is unable to bring his share of goodwill in cash.

Prepare Revaluation account, Partners’ Capital accounts and the Balance Sheet of the new firm after C’s admission.

The solution of Question 65 Chapter 5 - Unimax Class 12 Part 1: -

Revaluation A/c

Particulars		Rs.	Particulars	Rs.
To Provision for bad debts a/c		800	By Building a/c	7000
To Furniture a/c		300
To Profit on revaluation
A (3 : 1)	4,425
B	1,475	5,900
		7,000		7000

Capital Accounts

Particulars	A	B	C	Particulars	A	B	C
To A’s Capital a/c	-	-	3,075	By Balance b/d	30,000	16,000	-
To B’s Capital a/c	-	-	1,025	By Reserve Fund a/c	3,000	-	-
To Balance c/d	40,500	19,500	15,900	By Profit on rev.	4,425	-	-
				By C’s Capital a/c	3,075	1,500	-
				By Cash	-	-	20,000
	40,500	19,500	20,000		40,500	19,500	20,000

Balance Sheet

Liabilities		Rs.	Assets		Rs.
Sundry Creditors		41500	Bills Receivable		3000
Capital Accounts			Debtors	16000
A	40500		Less : Provision	800	15200
B	19500		Cash at Bank (26500 + 20000)		46500
C	19500	75900	Land and building		32000
			Stock		20000
			Fixtures		700
		1,17,400			1,17,400

Working Note:

(A) Calculation of New partners’ capital :

Total Capital of firm = (A’s capital balance c/d + B’s capital balance c/d) X 4/3 (Reciprocal of combined share)
= (40500 + 19500) X 4/3
Total share of firm = 1
C’s share = 1/4
Combined share of A & B = 1 – 1/4 = 3/4 = 60000 X 4/3 = Rs. 80000
C’s share of capital = 80000 X 1/4= Rs. 20000

https://tutorstips.com/what-is-partnership/

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