Question 19 Chapter 4 of +2-A - T.S. Grewal 12 Class Part

Question 19 Chapter 4 of +2-A

Table of Contents

The solution of Question 19 Chapter 4 of +2-A

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)

19. X and Y are partners sharing profits in the ratio of 2 : 1. On 31st March,
2019, their Balance Sheet showed General Reserve of 60,000. It was decided that in future they will share profits and losses in the ratio of 3 : 2. Pass necessary Journal entry in each of the following alternative cases:

When General Reserve is not to be shown in the new Balance Sheet.
When General Reserve is to be shown in the new Balance Sheet.

The solution of Question 19 Chapter 4 of +2-A

In the case I – When General Reserve is not to be shown in the new Balance Sheet.

In the Books of _______________
Date	Particulars		L.F.	Debit	Credit
2019
31^st March	General Reserve A/c	Dr		60,000
	To X’s Capital A/c^*1				40,000
	To Y’s Capital A/c^*1				20,000
	(Being Adjustment for General Reserve)

Working Note :

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WN *1 Calculation of Share of General Reserve –

Amount to be Credited to X’s Capital	=	60,000	X	2
				3
	=	40,000

Amount to be Credited to Y’s Capital	=	60,000	X	1
				3
	=	20,000

In the case II – When General Reserve is to be shown in the new Balance Sheet

In the Books of _______________
Date	Particulars		L.F.	Debit	Credit
2019
April 1	Y’s Capital A/c^*1	Dr		4,000
	To X’s Capital A/c				4,000
	(Being Adjustment for General Reserve through Capital account)

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Working Note :

WN *2 Calculation of Share of General Reserve –

Old Ratio of X, & Y	=	2 : 1
New Ratio of X, & Y	=	3 : 2

Calculate the Sacrificing or Gaining Ratio of Partners
Sacrificing or Gaining Ratio = Old Ratio – New Ratio

X’s Sacrificing/Gaining share	=	2	–	3
		3		5

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	=	10- 9
	=	15

	=	1	(Sacrificing)
		15

Y’s Share Sacrificing/Gaining	=	1	–	2
		3		5

	=	5 – 6
	=	15

	=	– 1	Gaining
		15

Amount to be Credited to X’s Capital	=	60,000	X	1
				15
	=	4,000

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Amount to be Credited to Y’s Capital	=	60,000	X	1
				15
	=	4,000

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

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