Question 10 Chapter 4 - Unimax Class 12 Part 1 - 2021

Question 10 Chapter 4 – Unimax Class 12 Part 1

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The solution of Question 10 Chapter 4 – Unimax Class 12 Part 1

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

10. X, Y and Z were partner in a firm sharing profits in ratio of 2 : 2 : 1. Their Balance Sheet as at 31st March, 2021 was as follows.

Liabilities		Amount	Assets	Amount
Creditors		30,000	Land	85,000
Bills Payable		20,000	Building	50,000
Outstanding Expenses		25,000	Plant	100000
General Reserve		50,000	Stock	40,000
Capitals :			Debtors	25,000
X	50,000		Cash	5000
Y	60,000
Z	70,000	180000
		3,05,000		3,05,000

From 1st April, 2021 the partners decided to share profits in ratio of 1 : 2 : 3. For this purpose it was agreed that :
(1) The goodwill of firm is to be valued at Rs. 60,000.
(2) Land is to be revalued at Rs. 1,00,000 and Building is to be depreciated by 6%.
(3) Creditors amounting to Rs. 3,000 are not to be paid.
You are required to
(a) Record the necessary Journal entries to give effect to the above arrangement.
(b) Prepare Revaluation A/c and the Capital accounts of the partners.
(c) Prepare the Balance Sheet of the reconstituted firm. (If revised values are to be recorded in books and General Reserve is to be distributed.)

The solution of Question 10 Chapter 4 – Unimax Class 12 Part 1

Journal

Date	Particulars		L.F.	Debit	Credit
April 1 2007	Revaluation A/c	Dr.		3000
	To Building A/c				3000
	(Being decrease in the value of building)
April 1	Land A/c	Dr.		15000
	Creditors A/c	Dr.		3000
	To Revaluation A/c				18000
	(Being increase in the value of land and decrease in the value of creditors)
April 1	Revaluation A/c	Dr.		15000
	To X’s capital A/c				6000
	To Y’s capital A/c				6000
	To Z’s capital A/c				3000
	(Being profit on revaluation transferred to capital accounts of partners in old profit sharing ratio)

Journal

Date	Particulars		L.F.	Debit	Credit
April 1	Z’s Capital A/c	Dr.		18000
	To X’s Capital A/c				14000
	To Y’s Capital A/c				4000
	(Being adjustment entry passed for treatment of goodwill on change in profit sharing ratio)
April 1	General Reserve A/c	Dr.		50,000
	To X’s capital A/c				20000
	To Y’s capital A/c				20000
	To Z’s capital A/c				10000
	(Being profit on revaluation transferred to capital accounts of partners in old profit sharing ratio)

Revaluation A/c

Particulars		Rs.	Particulars	Rs.
To Building		3000	By Land	15000
To Profit on revaluation transferred to			By Creditors	3000
X’s Capital A/c	6000
Y’s Capital A/c	6000
Z’s Capital A/c	3000	15000



		18000		18000

Capital Accounts

Particulars	X	Y	Z	Particulars	X	Y	Z
To X’s Capital A/c	_	_	14000	By Balance b/d	50000	60000	70000
To Y’s Capital A/c	_	_	4000	By Revaluation A/c (Profit)	6000	6000	3000
To Balance c/d	90000	90000	65000	By General Reserve	20000	20000	10000

				By Z’s Capital A/c	14000	4000
	90000	90000	83000		90000	90000	83000

Balance Sheet

Particulars	Rs.	Particulars	Rs.
Creditors	27000	Land	100000
Bills Payable	20000	Building	47000
Outstanding Expenses	25000	Plant	100000
Capitals		Stock	40000
X	90000	Debtors	25000
Y	90000	Cash	5000
Z	65000

	317000		317000

Working Note :
Calculation of individual partner’s gain/sacrifice :

	Old Share	New Share	Difference
X	2/5	1/6	7/30 (Sacrifice)
Y	2/5	2/6	2/30 (Sacrifice)
Z	1/5	3/6	9/30 (Gain)

Z will make compensation to X & Y.

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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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The solution of Question 10 Chapter 4 – Unimax Class 12 Part 1

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

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