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Question 93 Chapter 5 of +2-A
93. Sarthak and Vansh are partners sharing profits in the ratio of 2 : 1. Since both of them are specially abled sometimes they find it difficult to run the business on their own. Mansi, a common friend, decides to help them. Therefore, they admit her into partnership for 1/3rd share in profits. She brings 60,000 for goodwill and proportionate capital. At the time of admission of Mansi, the Balance Sheet of Sarthak and Vansh was as under:
| Liabilities | Assets | ||||
| Capital A/cs: | Plant | 66,000 | |||
| Sarthak | 70,000 | Furniture | 30,000 | ||
| Vansh | 60,000 | 1,30,000 | Investments | 40,000 | |
| General Reserve | 18,000 | Stock | 46,000 | ||
| Bank Loan | 18,000 | Debtors | 38,000 | ||
| Creditors | 72,000 | Less: Provision for Bad Debts | 4,000 | 34,000 | |
| Cash | 22,000 | ||||
| 2,38,000 | 2,38,000 |
It was decided to:
(a) Reduce the value of Stock by 10,000.
(b) Plant is to be valued at 80,000.
(c) An amount of 3,000 included in Creditors was not payable.
(d) Half of the investments were taken over by Sarthak and remaining were valued at 25,000.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of reconstituted firm.
Revaluation Account
| Particular |
Amount | Particular | Amount | ||
|---|---|---|---|---|---|
| To Stock A/c | 10,000 | By Plant A/c | 14,000 | ||
| By Creditors A/c | 3,000 | ||||
| By Investments A/c | 5,000 | ||||
| Profit transferred to | |||||
| Sarthak’s Capital A/c | 8,000 | ||||
| Vansh’s Capital A/c | 4,000 | 12,000 | |||
| 22,000 | 22,000 | ||||
Partners’ Capital Account
| Parti culars |
Sarthak | Vansh | Mansi |
Partic |
Sarthak | Vansh | Mansi |
|---|---|---|---|---|---|---|---|
| To Investments A/c | 20,000 | - | - | By Balance B/d | 70,000 | 60,000 | - |
| By Cash A/c | - | - | 1,00,000 | ||||
| By Premium for Goodwill | 40,000 | 20,000 | - | ||||
| By General Reserve A/c | 12,000 | 6,000 | - | ||||
| By Revaluation (Profit) | 8,000 | 4,000 | - | ||||
| To Balance c/d | 1,10,000 | 90,000 | 1,00,000 | ||||
| 1,30,000 | 90,000 | 1,00,000 | 1,30,000 | 90,000 | 1,00,000 |
Balance Sheet
| Liabilities |
Amount | Assets | Amount | ||
|---|---|---|---|---|---|
| Bank Loan | 18,000 | Plant | 80,000 | ||
| Creditors | 69,000 | Furniture | 30,000 | ||
| Debtors | 38,000 | ||||
| Capital A/cs: | Less: Provision for Bad debts | 4,000 | 34,000 | ||
| Sarthak | 1,10,000 | Investments | 25,000 | ||
| Vansh | 90,000 | Stock | 36,000 | ||
| Mansi | 1,00,000 | 3,00,000 | Cash | (22,000 + 60,000 + 1,00,000 | 1,82,000 |
| 3,87,000 | 3,87,000 | ||||
Working Note:-
Calculation of New profit-sharing ratio
Mansi’s Share of Profits = 1/3
| Remaining share | = | 1 | - | 1 |
| 3 |
| = | 3 - 1 |
| 3 |
| = | 2 |
| 3 |
| Sarthak’s New Share of Profits | = | 2 | X | 2 |
| 3 | 2 |
| = | 4 |
| 9 |
| Vansh’s New Share of Profits | = | 2 | X | 1 |
| 3 | 3 |
| = | 2 |
| 9 | |
Sarthak : Vansh : Mansi = 4 : 2 : 3
Calculation of Mansi’s Capital
| Total Adjusted Capital of the Old Partners | = | Sarthak’s Capital + Vansh’s Capital |
| = | (1,10,000 + 90,000) | |
| = | 2,00,000 | |
| Combined New Share of the Old Partners | = | (4/9 + 2/9) |
| = | 6/9 or 2/3 |
Total Capital of the new firm = (Adjusted Capital of the Old Partners × Reciprocal of Combined New Share of the Old Partners)
| = | 2,00,000 | X | 3 |
| 2 | |||
| = | 3,00,000 |
Calculation of Mansi’s Capital
Mansi’s Capital = (Total Capital of the new firm × His Share of Profits)
| = | 3,00,000 | X | 1 |
| 3 | |||
| = | 1,00,000 |
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.93 | 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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