Question 21 Chapter 4 of +2-A - T.S. Grewal 12 Class Part

Question 21 Chapter 4 of +2-A

Table of Contents

The solution of Question 21 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)

21. X, Y and Z share profits as 5 : 3 : 2. They decide to share their future profits as 4 : 3 : 3 with effect from 1st April, 2019. On this date the following revaluations have taken place:

	Book Values	Revised Values
Investments	22,000	25,000
Plant and Machinery	25,000	20,000
Land and Building	40,000	50,000
Outstanding Expenses	5,600	6,000
Sundry Debtors	60,000	50,000
Trade Creditors	70,000	60,000

Pass necessary adjustment entry to be made because of the above changes in the values of assets and liabilities. However, old values will continue in the books .

The solution of Question 21 Chapter 4 of +2-A

In the Books of _______________
Date	Particulars		L.F.	Debit	Credit
2019
April 1	Z’s Capital A/c^*3	Dr		760
	To X’s Capital A/c				760
	(Being profit on revaluation Adjusted through Capital account)

In the Books of _______________
Particulars	Amount
Increase in Investment	3,000 Cr.
Decrease in Plant and Machinery	5, 000 Dr.
Increase in Land and Building	10,000 Cr.
Increase in Outstanding Expenses	400 Dr.
Decrease in Sunday Debtors	10,000 Dr.
Decrease in Trade Creditors	10,000 Cr.
Profit on Revaluation	7,600

Advertisement-X

Working Note :

WN *2 Calculation of Share of General Reserve –

Old Ratio of X, & Y	=	5 : 3 : 2
New Ratio of X, & Y	=	4 : 3 : 3

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

X’s Share Sacrificing/Gaining	=	5	–	4
		10		10

	=	5- 4
	=	10

	=	1	(Sacrificing)
		10

Advertisement-Y

Y’s Share Sacrificing/Gaining	=	3	–	3
		10		10

	=	3 -3
	=	10
	=	Nil

Z’s Share Sacrificing/Gaining	=	2	–	3
		10		10

	=	2- 3
	=	10

	=	-1	(Gain)
		10

WN *3 Calculation of Adjustment of Revaluation Profit/Loss : –

Amount to be Credited to X’s Capital	=	7,600	X	1
				10
	=	760

Amount to be Debited to Z’s Capital	=	7,600	X	1
				10
	=	760

Advertisement-X

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