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Question 76 Chapter 5 of +2-A
76. A and B are partners in a firm. The net profit of the firm is divided as follows: 1/2 to A, 1/3 to B and 1/6 carried to a Reserve. They admit C as a partner on 1st April, 2019 on which date, the Balance Sheet of the firm was:
| Liabilities | Assets | |||
| Capital A/cs: | Building | 50,000 | ||
| A | 50,000 | Plant and Machinery | 30,000 | |
| B | 40,000 | 90,000 | Stock | 18,000 |
| Reserve | 10,000 | Debtors | 22,000 | |
| Creditors | 20,000 | Bank | 5,000 | |
| Outstanding Expenses | 5,000 | |||
| 1,25,000 | 1,25,000 |
Following are the required adjustments on admission of C:
(a) C brings in 25,000 towards his capital.
(b) C also brings in 5,000 for 1/5th share of goodwill.
(c) Stock is undervalued by 10%.
(d) Creditors include a liability of 4,000, which has been decided by the court at 3,200.
(e) In regard to the Debtors, the following Debts proved Bad or Doubtful− 2,000 due from X−bad to the full extent; 4,000 due from Y−insolvent, estate expected to pay only 50%. You are required to prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm
Revaluation Account
| Particular |
Amount | Particular | Amount | ||
|---|---|---|---|---|---|
| To Bad Debts | 2,000 | By Stock A/c | 2,000 | ||
| To Provision for Doubtful Debts A/c 4,000 X 50% | 2,000 | By Creditors (4,000 – 3,200) | 800 | ||
| Loss transferred to | |||||
| A Capital | 720 | ||||
| B Capital | 480 | 1,200 | |||
| 4,000 | 4,000 | ||||
Partners’ Capital Account the year ended 31st March, 2019
| Parti culars |
A | B | C |
Partic |
A |
B | C |
|---|---|---|---|---|---|---|---|
| To Revaluation A/c | 720 | 480 | - | By Balance B/d | 50,000 | 40,000 | - |
| By Bank A/c A/c | - | - | 25,000 | ||||
| By Reserve A/c | 6,000 | 4,000 | - | ||||
| By Premium for Goodwill | 3,000 | 2,000 | - | ||||
| To Balance c/d | 58,280 |
45,520 | 25,000 | ||||
| 59,000 | 46,000 | 25,000 | 59,000 | 46,000 | 25,000 |
Balance Sheet
| Liabilities |
Amount | Assets | Amount | ||
|---|---|---|---|---|---|
| Creditors | (20,000 - 800) | 19,200 | Building | 50,000 | |
| Outstanding Expenses | 5,000 | Plant and Machinery | 30,000 | ||
| Stock | (18,000 × 100/90) | 20,000 | |||
| Capital: | Debtors | 22,000 | |||
| A | 58,280 | Less: Bad Debt | 2,000 | ||
| B | 45,520 | Less: Prov. for D. Debts | 2,000 | 18,000 | |
| C | 25,000 | 1,28,800 | Bank | (5,000+30,000) | 35,000 |
| 1,53,000 | 1,53,000 | ||||
Working Note:-
Calculation of Sacrificing Ratio
Old Ratio of A and B = 3 : 2
Sacrificing Ratio = 3 : 2
Distribution of Premium for Goodwill
| A will get | = | 10,000 | X | 3 |
| 5 | ||||
| = | 6,000 |
| B will get | = | 10,000 | X | 2 |
| 5 | ||||
| = | 4,000 |
Distribution of Premium for Goodwill
| A will get | = | 5,000 | X | 3 |
| 5 | ||||
| = | 3,000 |
| B will get | = | 5,000 | X | 2 |
| 5 | ||||
| = | 2,000 |
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
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.
This guide covers "Q.No.76 | Chapter 5 – Admission of Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1.
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