Question 25 Chapter 4 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 25 Chapter 4 of +2-A

Question 25 Chapter 4 of +2-A

25. X, Y and Z are partners sharing profits and losses in the ratio of 7 : 5 : 4. Their Balance Sheet as at 31st March, 2019 stood as:

Liabilities     Assets  
Capital A/c     Sundry Assets  7,00,000
X 2,10,000      
Y 1,50,000      
Z 1,20,000 4,80,000     
General Reserve   65,000    
Profit and Loss A/c    25,000    
Creditors    1,30,000     
         
    7,00,000    7,00,000

Partners decided that with effect from 1st April, 2019, they will share profits and losses in the ratio of 3 : 2 : 1. For this purpose, goodwill of the firm was valued at 1,50,000. The partners neither want to record the goodwill nor want to distribute the General Reserve and profits. Pass a Journal entry to record the change and prepare Balance Sheet of the constituted firm.

 

The solution of Question 25 Chapter 4 of +2-A

 

In the Books of _______________
Date Particulars
L.F. Debit Credit
2019          
April 1 X’s Capital A/c Dr   15,000  
  Y’s Capital A/c Dr   5,000  
  To Z’s Capital A/c*1       20,000
  (Being adjustment make for the revaluation of assets and liabilities)        

 

 

Balance Sheet
as on 01st April, 2019
Particulars
Amount Particulars Amount
Capital A/c*1     Sunday Assets 7,00,000
X 1,95,000      
Y 1,45,000      
Z 1,40,000 4,80,000   20,000
General Reserve   25,000    
Profit and Loss A/c   1,30,000    
    7,00,000   7,00,000

 

Working Note : 

Old Ratio of X, & Y = 7 : 5 : 4 
New Ratio of X, & Y = 3 : 2 : 1

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

X’s Share Sacrificing/Gaining = 7  – 3
16 6
  = 21 – 24 
  48
  = -3  (Gain)
  48

 

Y’s Share Sacrificing/Gaining = 5  – 2
16 6
  = 15 – 16
  48
  = -1 (Gain)
  48
Z’s Share Sacrificing/Gaining = 4  – 1
16 6
  = 12 – 8
  48
  = 4 (Sacrifice)
  48

Calculation of Profit or Loss on Revaluation

Revaluation A/c
Particulars
Amount Particulars
Amount
To Computers A/c 25,000 By Machinery A/c 50,000
To Outstanding expenses A/c 10,000 By Creditors A/c 15,000
To Profit on Revaluation 30,000    
  65,000     65,000

 

WN *1 Adjustment of Profit on revaluation of in the sacrificing and gaining share: –

Total Amount for Adjustment = General Reserve+ P/L A/c+ Goodwill
  = 65,000+ 25,000+ 1,50,000
  = Rs 2,40,000

 

Amount to be Debited to X’s Capital = 2,40,000 X 3
48
  = 15,000    

 

Amount to be Debited to Y’s Capital = 2,40,000 X 1
48
  = 5,000    

 

Amount to be Debited to Z’s Capital = 2,40,000 X 4
48
  = 20,000    

WN *2 Balance of all partners’ Capital Account

Partners’ Capital Accounts
for the year ended 31st March, 2019
Particulars
X Y Z Particulars
X Y Z
To Z’s Capital A/c 15,000 5,000 By Balance B/d 2,10,000 1,50,000 1,20,000
        By X’s Capital A/c *1 15,000
        By Y’s Capital A/c *1 5,000
To Balance c/d
1,95,000
1,45,000
1,40,000
       
  2,10,000 1,50,000
1,40,000
    2,10,000
1,50,000
1,40,000

 

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 25 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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