Q.No.81 | Chapter 6 – Retirement/Death of a Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 81 Chapter 6 of +2-A

81. X, Y and Z were partners in a firm sharing profits and losses in the ratio of 3 : 2: 1. Z died on 30th June 2018. The Balance Sheet of the firm as at that 31st March 2018 is as follows:

Liabilities		Amount	Assets	Amount
X's Capital A/c	2,40,000		Machinery	2,40,000
Y's Capital A/c	1,60,000		Furniture	1,50,000
Z's Capital A/c	80,000	4,80,000	Investments	40,000
X's Current A/c		16,000	Stock	64,000
Y's Current A/c		5,000	Sundry Debtors	50,000
Reserve		60,000	Bills Receivable	22,000
Bills Payable		34,000	Cash at Bank	37,000
Sundry Creditors		40,000	Cash in Hand	22,000
			Z's Current A/c	10,000
		6,35,000		6,35,000

 

The following decisions were taken by the remaining partners:
a A Provision for Doubtful Debts is to be raised at 5% on Debtors.
b While Machinery to be decreased by 10%, Furniture and Stock are to be appreciated by 5% and 10% respectively.
c Advertising Expenses 4,200 are to be carried forward to the next accounting year and, therefore, it is to be adjusted through the Revaluation Account.
d Goodwill of the firm is valued at 60,000.
e X and Y are to share profits and losses equally in future.
f Profit for the year ended 31st March 2018 was 8,16,000 and Z's share of profit till the date of death is to be determined on the basis of profit for the year ended 31st March 2018.
g The Fixed Capital Method is to be converted into the Fluctuating Capital Method by transferring the Current Account balances to the respective Partners' Capital Accounts. Prepare the Revaluation Account, Partners' Capital Accounts and prepare C's Executors' Account to show that C's Executors were paid in two half-yearly instalments plus interest of 10% p.a. on the unpaid balance.
The first instalment was paid on 31st December 2018.

 

 

The solution of Question 81 Chapter 6 of +2-A: -

 

Revaluation Account

Particular		Amount	Particular		Amount
Machinery		1,00,000	Furniture		7,500
Provision for Doubtful Debts		2,500	Stock		6,400
			Prepaid Advertisement Expenses		4,200
			Loss transferred to
			X’s Capital A/c	4,200
			Y’s Capital A/c	2,800
			Z’s Capital A/c	1,400	8,400
		26,500			26,500

 

Partners’ Capital Account

Part.	X	Y	Z	Part.	X	Y	Z
To Current A/c	-	-	10,000	By Balance B/d	2,40,000	1,60,000	80,000
To Revaluation A/c	4,200	2,800	1,400	By Current A/c	16,000	5,000	-
To Z’s Capital A/c	-	10,000	-	By Reserve	30,000	20,000	10,000
To Z’s Capital A/c	-	34,000	-	By Y’s Capital A/c	-	-	34,000
To Executors A/c	-	-	1,22,600	By Y’s Capital A/c	-	-	10,000
					-	-
To Balance c/d	2,81,800	1,38,200	-
	2,86,000	1,85,00	1,34,000		2,86,000	1,85,00	1,34,000

 

T’s Executor’s Account

Date	Particular	Amount	Date	Particular		Amount
2018
Dec. 31	To Bank A/c 61,300 + 6,130	67,430	Jun. 30	By Z’s Capital A/c		1,22,600
2019
Mar. 31	To Balance c/d	62,832.5	Dec. 31	By Interest (1,22,600×10100×612		6,130
			Mar. 31	By Interest (61,300×10100×312)		1,532.5
		1,30,262.5				1,30,262.5
2019
Jun. 30	To Bank 61,300 + 3,065	28,750	April 01	By Balance b/d		62,832.5
2020
Jan. 31	To Cash A/c 25,000 + 2,500	27,500	Jun. 30	By Interest (61,300×10100×312		1,532.5
		64,365				64,365

 

 

Working Notes:

Calculation of Profit & Loss Suspense

Profit & loss Suspense	=	8,16,000	X	1	X	6
				3		12
	=	Rs 34,000

 

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

 

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