Q.No.92 | Chapter 5 – Admission of Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 92 Chapter 5 of +2-A

92. Following is the Balance Sheet of Abha and Binay as at 31st March, 2014:

Liabilities			Assets
Creditors		13,000	Bank		15,000
Employees Provident Fund		8,000	Debtors	22,000
Workmen Compensation Fund		15,000	Less : Provision for Doubtful Debts	1,000	21,000
Capital A/cs			Stock		10,000
Abha	55,000		Plant and Machinery		60,000
Binay	30,000	85,000	Goodwill		10,000
			Profit and Loss		5,000
		1,21,000			1,21,000

Chitra was admitted as a partner for 1/4th share in the profits of the firm. It was decided that:
(a) Bad Debts amounted to 1,500 will be written off.
(b) Stock worth 8,000 was taken over by Abha and Binay at Book Value in their profit-sharing ratio. The remaining stock was valued at 2,500.
(c) Plant and Machinery and Goodwill were valued at 32,000 and 20,000 respectively.
(d) Chitra brought her share of goodwill in cash.
(e) Chitra will bring proportionate capital and the capitals of Abha and Binay will be adjusted in their profit-sharing ratio by bringing in or paying off cash as the case may be.
Prepare Revaluation Account and Partners' Capital Accounts

 

 

 

The solution of Question 92 Chapter 5 of +2-A: -

Revaluation Account

Particular		Amount	Particular		Amount
Bad debts		500	Stock		500
Plant and Machinery		28,000
			Loss on Revaluation
			Abha’s Capital A/c	14,000
			Binay’s Capital A/c	14,000	28,000
		28,500			28,500

 

Partners’ Capital Account

Parti culars	Abha	Binay	Chitra	Partic ulars	Abha	Binay	Chitra
To Revaluation A/c	14,000	14,000	-	By Balance B/d	55,000	30,000	-
To Investment A/c	5,000	5,000	-	By Bank	-	-	18,000
To Profit and Loss	2,500	2,500	-	By Premium for Goodwill	2,500	2,500	-
To Stock	4,000	4,000	-	By WCF	7,500	7,500	-
To Balance c/d	39,500	14,500	18,000
	65,000	40,000	18,000		65,000	40,000	18,000
To Bank A/c	12,500	-	-	By Balance B/d	39,500	14,500	18,000
				By A’s Current A/c	60,550	-	-
To Balance c/d	27,000	27,000	18,000
	39,500	27,000	18,000		39,500	27,000	18,000

 

Working Note:-

Calculation of New Capital

New Capita = Total Adjusted Capital × Respective Partner's Profit Share

Abha ’s New Capital	=	54,000	X	1
				2
	=	27,000

Binay’s New Capital	=	54,000	X	1
				2
	=	27,000

Calculation of Chitra's Share of Goodwill
Chitra's Share = Firm's Goodwill × Chitra's Profit Share

=	20,000	X	1
			4
=	5,000

This will be shared between Abha and Binay in sacrificing ratio 1:1

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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