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

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

Question 10 Chapter 4 – Unimax Class 12 Part 1

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.

What is Partnership – Meaning and its Types

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

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)

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

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