Question 22 Chapter 4 of +2-A - T.S. Grewal 12 Class Part

Question 22 Chapter 4 of +2-A

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22. Ashish, Aakash and Amit are partners sharing profits and losses equally. The Balance Sheet as at 31st March, 2019 was as follows:

The partners decided to share profits in the ratio of 2 : 2 : 1 w.e.f. 1st April, 2019. They also decided that:

Value of stock to be reduced to 1,25,000.
Value of machinery to be decreased by 10%.
Land and Building to be appreciated by 62,000.
Provision for Doubtful Debts to be made @ 5% on Sundry Debtors.
Aakash was to carry out reconstitution of the firm at a remuneration of 10,000.
Pass necessary Journal entries to give effect to the above.

The solution of Question 22 Chapter 4 of +2-A

In the Books of _______________
Date	Particulars		L.F.	Debit	Credit
2019
April 1	General Reserve A/c^*1	Dr		90,000
	To Ashish’s Capital A/c				30,000
	To Akash’s Capital A/c				30,000
	To Amit’s Capital A/c				30,000
	(Being General Reserve Distributed among partners)
	Ashish’s Capital A/c	Dr		2,000
	Akash’s Capital A/c	Dr		2,000
	Amit’s Capital A/c	Dr		2,000
	To Advertisement Suspense A/c^*2				6,000
	(Being Advertisement Suspense adjusted)
	Revaluation A/c	Dr		54,000
	To Stock A/c				15,000
	To Machinery A/c				25,000
	To Provision for Doubtful Debts A/c				4,000
	To Akash’s Capital A/c				10,000
	(Being Increase in the value of the assets and decrease in the values of liabilities are transferred to revaluation a/c)
	Land & Building A/c	Dr		62,000
	To Revaluation A/c				66,000
	Being Increase in the value of the assets and decrease in the values of liabilities are transferred to revaluation a/c)
	Revaluation A/c^*3	Dr		8,000
	To Ashish’s Capital A/c				2,666
	To Akash’s Capital A/c				2,666
	To Amit’s Capital A/c				2,666
	(Being Profit on revaluation of assets and liabilities are Distributed among partners)

Working Note :

WN *1 Calculation of Adjustment of General Reserve: –

Amount to be Credited to Ashish’s Capital	=	90,000	X	1
				3
	=	30,000

Amount to be Credited to Akash’s Capital	=	90,000	X	1
				3
	=	30,000

Amount to be Credited to Amit’s Capital	=	90,000	X	1
				3
	=	30,000

WN *2 Calculation of Adjustment of Advertisement Suspense: –

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Amount to be Credited to Ashish’s Capital	=	6,000	X	1
				3
	=	2,000

Amount to be Debited to Akash’s Capital	=	6,000	X	1
				3
	=	2,000

Amount to be Credited to Ashish’s Capital	=	6,000	X	1
				3
	=	2,000

WN *3 Calculation of Adjustment of General Reserve: –

Amount to be Credited to Ashish’s Capital	=	8,000	X	1
				3
	=	2,666

Amount to be Debited to Akash’s Capital	=	8,000	X	1
				3
	=	2,666

Amount to be Credited to Amit’s Capital	=	8,000	X	1
				3
	=	2,666

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