Q.No.82 | Chapter 5 – Admission of Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 82 Chapter 5 of +2-A

82. Yogesh and Naresh are partners sharing profits in the ratio of 3 : 2. They admit Ramesh for 1/3rd share on 1st April, 2019 and also decide to share future profits equally. Balance Sheet of the firm as at 31st March, 2019 was as follows:

Liabilities			Assets
Capital A/cs:			Land		4,00,000
Yogesh	5,00,000		Building		4,00,000
Naresh	5,00,000	10,00,000	Furniture		50,000
Current A/cs			Computers		1,00,000
Yogesh	1,10,000		Stock		1,50,000
Naresh	90,000	2,00,000	Sundry Debtors	2,10,000
Employees' Provident Fund		25,000	Less: Provision for Doubtful Debt	10,000	2,00,000
Workmen Compensation Reserve		1,00,000	Cash		10,000
Sundry Creditors		75,000	Bank		70,000
Expenses Payable		10,000	Advertisement Suspense		30,000
		14,10,000			14,10,000

They admitted Ramesh on the following terms:
(a) He will bring 5,00,000 as his capital.
(b) His share of goodwill is valued at 1,00,000 but he is unable to bring cash for his share of goodwill. It is agreed to debit the amount to his Current Account.
(c) Value of Land and Building is to be appreciated by 40,000 each.
(d) Value of Furniture to be reduced to 40,000.
(e) Provision for Doubtful Debts to be increased to 10%.
(f) A liability for damages of 10,000 is to be created. Pass the Journal entries on admission of Ramesh and prepare Revaluation Account.

 

 

The solution of Question 82 Chapter 5 of +2-A: -

Date	Particulars		L.F.	Debit	Credit
	Cash A/c	Dr		5,00,000
	To Abhay’s Capital A/c				5,00,000
	(Being amount due to Abhay transferred to his Capital A/c)
	Cash A/c	Dr		1,00,000
	To Yogesh’s Current A/c (1,00,000 × 4/5)				80,000
	To Naresh’s Current A/c (1,00,000 × 1/5)				20,000
	(Being Capital and goodwill paid by the new partner
	Revaluation A/c	Dr		31,000
	To Provision for Doubtful Debts A/c				11,000
	To Liability for damages A/c				10,000
	To Furniture A/c				10,000
	(Being assets revalued and liabilities reassessed)
	Land A/c	Dr		40,000
	Building A/c	Dr		40,000
	To Revaluation A/c				80,000
	(Being appreciation in land and building provided for)
	Revaluation A/c (WN2)	Dr		49,000
	To Yogesh’s Current A/c				29,400
	To Naresh’s Current A/c				19,600
	(Being revaluation profit transferred to partner’s current A/c)
	Workmen Compensation Reserve A/c	Dr		1,00,000
	To Yogesh’s Current A/c				60,000
	To Naresh’s Current A/c				40,000
	(Being workmen compensation reserve distributed)
	Yogesh’s Current A/c	Dr		18,000
	Naresh’s Current A/c	Dr		12,000
	To Advertisement Suspense A/c				30,000
	(Being accumulated loss written off)

Working Note:-

Calculation of new profit-sharing ratio
Old Ratio of Yogesh and Gopal = 3 : 2
New Ratio of Yogesh and Gopal = 1 : 1

Yogesh’s New Ratio	=	3	-	1
		5		3

=	9- 5
	15

=	4
		15

Gopal's New Ratio	=	2	-	1
		5		3

=	6- 5
	15

=	1
		15

Calculation of Revaluation Profit/Loss:

Debit side total	=	(11,000 + 10,000 + 10,000)
	=	31,000
Credit side total	=	80,000
Gain on Revaluation	=	(80,000 – 31,000)
	=	49,000

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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