Q.No.94 | Chapter 5 – Admission of Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 94 Chapter 5 of +2-A

94. A, B and C are partners sharing profits and losses in the ratio of 2 : 3 : 5. On 31st March, 2019, their Balance Sheet was:

Liabilities			Assets
Creditors		64,000	Cash	18,000
Bills Payable		22,000	Bills Receivable	14,000
General Reserve		14,000	Stock	44,000
Capital A/cs:			Debtors	42,000
A	36,000		Machinery	94,000
B	44,000		Goodwill
C	52,000	1,32,000
		2,32,000		2,32,000

They admit D into partnership on the following terms:
(a) Machinery is to be depreciated by 15%.
(b) Stock is to be revalued at 48,000.
(c) It is found that the Creditors included a sum of 12,000 which was not to be paid.
(d) Outstanding Rent is 1,900.
(e) D is to bring in 6,000 as goodwill and sufficient capital for 2/5th share.
(f) The partners decided to use 10% of the profits every year in providing drinking water in schools, where required.
Prepare Revaluation Account, Partners' Capital Accounts, Cash Account and Balance Sheet of the new firm.

 

 

 

The solution of Question 94 Chapter 5 of +2-A: -

Revaluation Account

Particular		Amount	Particular		Amount
To Machinery A/c		14,100	By Stock A/c		4,000
To Outstanding Rent A/c		1,900	By Creditors A/c		12,000
		16,000			16,000

 

Partners’ Capital Account

Particulars	A	B	C	D
To Goodwill A/c	4,000	6,000	10,000
To Balance c/d	1,10,000	44,000	52,000	88,000
	40,000	50,000	1,00,000	88,000

 

Particulars	A	B	C	D
By Balance B/d	36,000	44,000	52,000
By Bank A/c (WN2)	-	-	-	88,000
By Premium for Goodwill A/c	1,200	1,800	3,000	-
By General Reserve A/c	2,800	4,200	7,000	-
	40,000	50,000	62,000	88,000

 

 

Balance Sheet

Liabilities		Amount	Assets		Amount
Creditors		52,000	Cash	(18,000 + 88,000 + 6,000)	1,12,000
Bills Payable		22,000	Bills Receivable		14,000
Outstanding Rent		1,900	Machinery	94,000
Capital A/cs:			Less: Depreciation	14,100	79,900
A	36,000		Investments		25,000
B	44,000		Stock		48,000
C	52,000		Debtors		42,000
D	88,000	2,20,000
		2,95,900			2,95,900

 

Working Note:-

Calculation of New profit-sharing ratio
D’s Share of Profits = 2/5

Remaining share	=	1	-	2
				5

=	5 - 2
	5

=	3
		5

 

A’s New Share of Profits	=	3	X	2
		5		10

=	6
		50

B’s New Share of Profits	=	3	X	3
		5		10

=	9
		50

C’s New Share of Profit	=	3	X	5
		5		10

=	15
		50

A : B : C : D = 6 : 9 : 15 : 20

Calculation of D’s Capita

Total Adjusted Capital of the Old Partners	=	A’s Capital + B’s Capital + C’s Capita
	=	(36,000 + 44,000 + 52,000)
	=	1,32,000
Combined New Share of the Old Partners	=	(9/50 + 15/50)
	=	30/50 or 3/5

Total Capital of the new firm = (Adjusted Capital of the Old Partners × Reciprocal of Combined New Share of the Old Partners)

=	1,32,000	X	5
			3
=	2,20,000

D’s Capital = (Total Capital of the new firm × His Share of Profits)

=	2,20,000	X	2
			5
=	88,000

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

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication