Question 25 Chapter 4 of +2 Part-1 – USHA Publication 12 Class Parat – 1

Question 25 Chapter 4 of +2- Part-

Question 25 Chapter 4 of +2-Part-1

25. (Journal/ Capital a/c/ Balance sheet) X and Y are partners sharing profits in 4:3 ratio. The balance sheet as on 31st March 2018 was as follows:

Liabilities Amount Assets Amount
Reserves    21,000 Fixed assets 75,000
Sundry creditors   14,000 Sundry Debtors  60,000
Capital A/c     Cash in hand  10,000
X 1,20,000   Stock  70,000
Y 60,000 1,80,000    
    2,15,000    2,15,000

They decided that with effect from 1st April 2018, they will share profits and losses in the ratio of 2:1. For this purpose, they decided that:

  1. Fixed assets to be depreciated by 10%.
  2. A provision of 6% is made on debtors for doubtful debts.
  3. Stock is valued at Rs.95,000.
  4. An amount of Rs.1,850 included in creditors is not likely to be claimed.
    Partners decide to record the revised values in the books. However, they do not want to disturb the reserve. You are required to pass the journal entries, prepare the capital accounts of partners and the revised balance sheet.

 

The solution of Question 25 Chapter 4 of +2 Part-1: – 

 

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

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

X’s Share Sacrificing/Gaining = 4 2
7 3
  = 12 – 14
  21
  = -2 (Gaining)
  21
Y’s Share Sacrificing/Gaining = 3 1
7 3
  = 9 – 7
  21
  = 2 (Sacrifice)
  21
In the Books of _______________
Date Particulars
L.F. Debit Credit
           
(i) Revaluation a/c Dr.   11,100  
  To Provision for doubtful debts a/c       7,500
  To Fixed assets a/c       3,600
  (Being assets revalued)        
           
(ii) Stock a/c Dr.   25,000  
  Sundry Creditors a/c Dr.   1,850  
  To Revaluation a/c       26,850
  (Being revaluation of assets and liabilities)        
           
(iii) Revaluation a/c Dr.   1,380  
  To X’s Capital a/c (Rs.15,750*4/7)       1,600
  To Y’s Capital a/c (Rs.15,750*3/7)       700
  (Being profit on revaluation distributed in 4:3 ratio)        
           
(iv) X’s Capital a/c (21,000*2/21) Dr.   2,000  
  To Y’s Capital a/c       2,000
  (Being adjustment in the capital for reserve due to change in profit ratio)        
           

 

Partners’ Capital Accounts
Particular
X Y Particular X Y
To Y’s Capital a/c 2,000 By
Balance
B/d
1,20,000 60,000
      By Revaluation a/c 9,000 6,750
      By Revaluation a/c 2,000
To Balance c/d 1,27,000 68,750        
    1,29,000 68,750     1,29,000 68,750

 

Balance Sheets
Liabilities
Amount Assets Amount
Capital A/c   Fixed Assets 67,500
X 17,400   Sundry Debtors: 60,000  
Y 10,700 37,000 Less: Provision for D/D 3,600 56,400
Reserve   21,000 Stock   95,000
Sundry Creditors   12,150 Cash in hand   10,000
           
           
    2,28,900     2,28,900

 

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Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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2 Book 1 min - Question 25 Chapter 4 of +2 Part-1 - USHA Publication  12 Class Parat - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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