Question 71 Chapter 5 - Unimax Class 12 Part 1 - 2021

Question 71 Chapter 5 - Unimax Class 12 Part 1 - 2021

71. A, B and C were partners sharing Profits and Losses in 3 : 2 : 1. On 1st April, 2021 they admitted D into partnership on the following terms :

Liabilities	Amount	Assets	Amount
Creditors	90,000	Cash at Hand	18,000
Capital :		Debtors	25,000
A	60,000	Stock	1,07,000
B	40,000	Investment at cost	30,000
C	20,000	Furniture and Fittings	10,000
Reserves	15,000	Plant	35,000
	2,25,000		2,25,000

They share Profits and Losses in the ratio of 6 : 5 : 3. They agreed on 1st January, 2021 to admit Suresh in the partnership and give him 1/10th share in profits on the following terms :

1. Suresh would bring in Rs. 28400 as his share of capital.
   
2. Stock would be depreciated by Rs. 3000 and furniture by Rs. 900.
   
3. A provision of Rs. 1300 be made for outstanding rapairs bill.
   
4. The value of land and building be appreciated upto Rs. 65000.
5. Goodwill of the firm is valued at Rs. 84000 before the admission of Suresh and he is unable to bring his share of assets in cash.

Pass necessary Journal Entries to record the above arrangements and prepare Revaluation account, Capital a/cs and the new Balance Sheet of the firm after Suresh’s admission.

The solution of Question 71 Chapter 5 - Unimax Class 12 Part 1: -

Journal

Date	Particulars		L.F.	Debit	Credit
	Revaluation a/c	Dr.		18000
	To Investments a/c				12000
	To Plant a/c				6000
	(Being value of assets decreased)
	Creditors a/c	Dr.		3000
	To Revaluation a/c				3000
	(Being value of liabilities decreased)
	A’s Capital a/c	Dr.		7500
	B’s Capital A/c			5000
	C’s Capital a/c			2500
	To Revaluation a/c				15000
	(Being net loss transferred to old partners’ capital a/c)
	Reserves a/c	Dr.		15000
	To A’s Capital A/c				7500
	To B’s Capital A/c				5000
	To C’s Capital A/c				2500
	(Being reserve fund transferred to old partners capital a/c)
	Bank a/c	Dr.		15000
	To Premium a/c				15000
	(Being goodwill brought by new partner)
	Premium a/c	Dr.		15000
	To A’s Capital a/c				15000
	(Being goodwill transferred to sacrificing partner)
	Bank a/c	Dr.		27000
	To D’s Capital a/c				27000
	(being amount of short capital received)

Revaluation A/c

Particulars	Rs.	Particulars		Rs.
To Investments a/c	3,000	By Creditors a/c		3000
To Plant a/c	900	By Loss on revaluation
		A	7500
		B (3 : 2 : 1)	5000
		C	2500	15000
	18,000			18,000

Capital Accounts

Particulars	A	B	C	D	Particulars	A	B	C	D
To Loss on rev.	7,500	5,000	2,500	-	By Balance b/d	60,000	40,000	20,000	-
To Balance c/d	75,000	40,000	20,000	27,000	By Reserve a/c	7,500	5,000	2,500	-
					By Premium a/c	15,000	-	-	-
					By Bank a/c	-	-	-	27,000
	82,500	45,000	22,500	27,000		82,500	45,000	22,500	27,000

Balance Sheet

Liabilities		Rs.	Assets	Rs.
Creditors		87,000	Cash at bank (18000 + 27000 + 15000)	65,000
Capital Accounts			Debtors	6,600
A	75,000		Stock	35,000
B	40,000		Investments	15,500
C	20,000		Furniture and Fittings	5,000
D	27,000	1,62,000	Plant	4,500
		2,49,000		2,49,000

Working Note:

Calculation of new partner’s capital :
Total capital of firm = (A, B and C combined closing balance) X 6/5
= (75000 + 40000 + 20000) X 6/5
= 135000 X 6/5 = Rs. 162000
D’s share of capital = 1/6 X 162000 = Rs. 27000

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