Q.No.99 | Chapter 5 – Admission of Partner | T.S. Grewal 12 Class Book Keeping Part - A - Vol. 1

Question 99 Chapter 5 of +2-A

99. Pradeep and Dhanraj were partners in a firm sharing profits in the ratio of 3 : 1. Their Balance Sheet on 31st March, 2019 was:

Liabilities			Assets
Creditors		30,000	Cash		4,000
Bills Payable		1,000	Debtors	50,000
Reserve Fund		16,000	Less: Provision for Doubtful Debts	5,000	45,000
Outstanding Salary		3,000	Stock		30,000
Capital A/cs:			Bills Receivable		10,000
Pradeep	60,000		Patents		1,000
Dhanraj	20,000	80,000	Machinery		40,000
		1,30,000			1,30,000

They admitted Leander as a new partner on this date. New profit-sharing ratio is agreed as 3 : 2 : 3. Leander brings in proportionate capital after the following adjustments:
(a) Leander brings 16,000 as his share of goodwill.
(b) Provisions for Doubtful Debts is to be reduced by 2,000.
(c) There is an old Printer valued at 2,400. It does not appear in the books of the firm. It is now to be recorded.
(d) Patents are valueless. Prepare Revaluation Account, Capital Accounts and opening Balance Sheet of Pradeep, Dhanraj and Leander.

 

 

The solution of Question 99 Chapter 5 of +2-A: -

 

Revaluation Account

Particular		Amount	Particular		Amount
Patents		1,000	Provision for Doubtful Debts		2,000
			Typewriter		2,400
Profit on Revaluation
Mohan Capital	2,550
Sohan Capital	850	3,400
		4,400			4,400

 

Partners’ Capital Account

Parti culars	Pradeep	Dhanraj	Leander	Partic ulars	Pradeep	Dhanraj	Leander
				By Balance B/d	60,000	20,000	-
				By Reserve Fund	12,000	4,000	-
				By Premium for Goodwill	16,000	-	-
				By Revaluation	2,550	850	-
To Balance c/d	90,550	24,850	-
	90,550	24,850	-		90,550	24,850	-
				By Balance B/d	90,550	24,850	-
				By Bank A/c	-	-	69,240
To Balance c/d	90,550	24,850	69,240
	90,550	24,850	69,240		90,550	24,850	69,240

 

Balance Sheet

Liabilities		Amount	Assets		Amount
Creditors		30,000	Stock		30,000
Bills Receivable		1,000	Debtors	50,000
Outstanding Salary		3,000
Capital:			Less: Reserve for D. Debt	3,000	47,000
Pradeep	90,550		Bills Receivable		10,000
Dhanraj	24,850		Machinery		40,000
Leander	69,240	1,84,640	Typewriter		2,400
			Cash		89,240
		2,18,640			2,18,640

 

Working Note:-

Old Ratio of Pradeep and Dhanraj = 3 : 1
New Ratio of Pradeep ,Dhanraj and Leander = 3 : 2 : 3

Sacrificing Ratio = Old Ratio – New Ratio

Pardeep’s New Ratio	=	3	-	3
		4		8

=	6 - 3
	8

=	3
		8

 

Dhanraj’s New Ratio	=	1	-	2
		4		8

=	2- 2
	8

=	0
		8

Leander acquires his share of profit from Pradeep only. Therefore, amount for goodwill brought by Leander will be taken by Pradeep alone

Distribution of Revaluation Profit

Pradeep will get	=	3,400	X	3
				4
	=	2,550

 

Dhanraj will get	=	3,400	X	3
				1
	=	850

 

Distribution of Reserve Fund

Pradeep will get	=	16,000	X	3
				4
	=	12,000

Dhanraj will get	=	16,000	X	1
				4
	=	4,000

 

Calculation of Leander’s Capital

Combined Capital of Pradeep and Dhanraj after all adjustments	=	90,550 + 24,850
	=	1, 15,400

Combined share of profit of Pradeep and Dhanraj = 1 − Leander share

Remaining share	=	1	-	3
				8

=	8 - 3
	8

=	5
		8

 

Total Capital of the firm on the basis of combined capital of Pradeep and Dhanraj	=	1,15,400	X	8
				5
	=	1,84,640

Leander’s Capital	=	1,84,640	X	3
				8
	=	69,240

 

Cash Account

Particular		Amount	Particular		Amount
Balance b/d		4,000
Leander’s Capital		69,240
Premium for Goodwill		16,000
			Balance c/d		89,240
		89,240			89,240

 

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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