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Question 101 Chapter 5 of +2-A
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101. Kalpana and Kanika were partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2019, they admitted Karuna as a new partner for 1/5th share in the profits of the firm. The Balance Sheet of Kalpana and Kanika as on 1st April, 2019 was as follows:
| Liabilities | Assets | ||||
| Capital A/cs: | Land and Building | 2,10,000 | |||
| Kalpana | 4,80,000 | Plant | 2,70,000 | ||
| Kanika | 2,10,000 | 6,90,000 | Stock | 2,10,000 | |
| General Reserve | 60,000 | Debtors | 1,32,000 | ||
| Workmen’s Compensation Fund | 1,00,000 | Less: Provision | 12,000 | ||
| Creditors | 90,000 | Cash | 1,30,000 | ||
| 9,40,000 | 9,40,000 |
It was agreed that:
(a)the value of Land and Building will be appreciated by 20%.
(b) the value of plant be increased by 60,000.
(c) Karuna will bring 80,000 for her share of goodwill premium.
(d) the liabilities of Workmen’s Compensation Fund were determined at 60,000.
(e) Karuna will bring in cash as capital to the extent of 1/5th share of the total capital of the new firm. Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm
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The solution of Question 101 Chapter 5 of +2-A: –
| Revaluation Account | |||||
| Particular | Amount | Particular | Amount | ||
| Land and Building A/c | 42,000 | ||||
| Plant A/c | 60,000 | ||||
| Profit on Revaluation | |||||
| Kalpana’s Capital A/c | 61,200 | ||||
| Kanika’s Capital A/c | 40,800 | 1,02,000 | |||
| 1,02,000 | 1,02,000 | ||||
| Partners’ Capital Account | |||||||
| Parti culars | Kalpana | Kanika | Karuna | Partic | Kalpana | Kanika | Karuna |
| By Balance B/d | 4,80,000 | 2,10,000 | – | ||||
| By Cash | – | – | 2,43,000 | ||||
| By General Reserve | 36,000 | 24,000 | – | ||||
| By Workmen’s Compensation Fund | 24,000 | 16,000 | – | ||||
| By Premium for Goodwill | 48,000 | 32,000 | – | ||||
| By Revaluation | 61,200 | 40,800 | – | ||||
| To Balance c/d | 6,49,200 | 3,22,800 | 2,43,000 | ||||
| 6,49,200 | 3,22,800 | 2,43,000 | 6,49,200 | 3,22,800 | 2,43,000 | ||
| Balance Sheet | |||||
| Liabilities | Amount | Assets | Amount | ||
| Creditors | 90,000 | Cash in Hand | 4,53,000 | ||
| Liability for Workmen Compensation | 60,000 | Debtors | 1,32,000 | ||
| Capital: | Less: Provision for debtors | 12,000 | 1,20,000 | ||
| Kalpana | 6,49,200 | Stock | 2,10,000 | ||
| Kanika | 3,22,800 | Land and Building | 2,52,000 | ||
| Karuna | 2,43,000 | 12,15,000 | Plant | 3,30,000 | |
| 13,65,000 | 13,65,000 | ||||
Working Note:-
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Karuna is admitted for 1/5th share
Let the total share of the business = 1
| Remaining share | = | 1 | – | 1 |
| 5 |
| = | 5 – 1 | |
| 5 |
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| = | 4 | |
| 5 |
To Calculate to New Ratio distribute the remaining share in the old ratio of old partners’
New Ratio = Combined share of Kalpana and Kanika X Old Ratio
| Kalpana’s Share | = | 4 | X | 3 |
| 5 | 5 |
| = | 12 | |
| 25 |
| Kanika’s Share | = | 4 | X | 2 |
| 5 | 5 |
| = | 8 | |
| 25 |
New Profit sharing Ratio = 12 : 8 : 5
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Calculation of Sacrificing Ratio
| Kalpana’s Share | = | 3 | – | 12 |
| 5 | 15 |
| = | 15 -12 | |
| 25 |
| = | 3 | |
| 25 |
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| Kanika | = | 2 | – | 8 |
| 5 | 25 |
| = | 10- 8 | |
| 25 |
| = | 2 | |
| 25 |
Sacrificing Ratio = 3 : 2
Calculate of Karuna’s Capital
| Adjusted Capital of Kalpana | = | 6,49,200 |
| Adjusted Capital of Kanika | = | 3,22,800 |
| Total Adjusted Capital | = | 9,72,000 (6,49,200+3,22,800) |
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Karuna’s Capital = Total Adjusted Capital X Karna’s Profit Share X Reciprocal of combined new Share of Old Partner
| Karuna’s Share of Goodwill | = | 9,72,000 | x | 1 | x | 5 |
| 5 | 4 | |||||
| = | 2,43,000 |
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
