Question 22 Chapter 4 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 22 Chapter 4 of +2-A

Question 22 Chapter 4 of +2-A

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

Liabilities     Assets  
Sundry Creditors    75,000 Cash in Hand   24,000
General Reserve   90,000 Cash at Bank  1,40,000
Capital A/c     Sundry Debtors 80,000
Ashish 3,00,000   Stock  1,40,000
Aakash 3,00,000   Land and Building 4,00,000
Amit 2,75,000 8,75,000  Machinery 2,50,000
      Advertisement Suspense 6,000
    10,40,000    10,40,000

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

  1. Value of stock to be reduced to 1,25,000.
  2. Value of machinery to be decreased by 10%.
  3. Land and Building to be appreciated by 62,000.
  4. Provision for Doubtful Debts to be made @ 5% on Sundry Debtors.
  5. 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: –

 

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    

 

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)

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

2 Book 1 min - Question 22 Chapter 4 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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