# Question 21 Chapter 4 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 21 Chapter 4 of +2-A

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

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

### 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. 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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