Question 21 Chapter 4 of +2-A
Table of Contents
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 |
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 |
| 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 |
Advertisement-X
| Amount to be Debited to Z’s Capital | = | 7,600 | X | 1 |
| 10 | ||||
| = | 760 |
Advertisement-Y
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
