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Question 26 Chapter 4 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 26 Chapter 4 of +2-A
Question No.26 Chapter No.4 - T.S. Grewal +2 Book 2019-Solution

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Question 26 Chapter 4 of +2-A

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26. A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their Balance Sheet as on 31st March, 2015 was as follows:

Liabilities  Assets 
Creditors  50,000Land 50,000
Bills Payable 20,000Building50,000
General Reserve  30,000Plant 1,00,000
Capital A/c  Stock 40,000
X1,00,000 Debtors 30,000
Y50,000 Bank5,000
Z25,0001,75,000   
  2,75,00  2,75,000

From 1st April, 2015, A, B and C decided to share profits equally. For this it was agreed that:

  1. Goodwill of the firm will be valued at 1,50,000.
  2. Land will be revalued at 80,000 and building be depreciated by 6%.
  3. Creditors of 6,000 were not likely to be claimed and hence should be written off.
    Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the reconstituted firm.

The solution of Question 26 Chapter 4 of +2-A

Revaluation A/c
Particulars
Amount ParticularsAmount
To Building A/c 3,000By Land A/c30,000
To Profit on Revaluation*1  By Creditors A/c6,000
X16,500   
Y11,000   
Z5,50033,000 20,000
  63,000 36,000

 

Partners’ Capital Accounts
Particulars
ABCParticulars
ABC
To A’s Capital A/c  25,000By Balance B/d1,00,00050,00025,000
    By Revaluation A/c16,50011,0005,500
    By General Reserve A/c *115,00010,0005,000
    By C’s Capital A/c25,000
To Balance c/d
1,56,500
71,000
10,500    
 1,56,500 71,000
35,500
  1,56,500
71,000
35,500

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Balance Sheet
Particulars
Amount Particulars
Amount
Capital A/c*1 3,000Land50,000 
A1,56,500 Add: Increase30,00080,000
B71,000 Building50,000 
C10,5002,38,000Less: Dep.3,00047,000
General Reserve65,000 Plant 1,00,000
Less: Written-off16,50044,000Bank 5,000
Bills Payable11,00020,000Stock 40,000
   Debtors 30,000
  3,02,000  3,02,000

Working Note : 

WN *1 Adjustment of Profit on revaluation: –

 

Amount to be Credited to A’s Capital=33,000X3
6
 =16,500  

 

Amount to be Debited to B’s Capital=33,000X2
6
 =11,000  

 

Amount to be Debited to C’s Capital=33,000X1
6
 =5,500  

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WN *2 Adjustment of General Reserve: –

Amount to be Credited to X’s Capital=30,000X3
6
 =15,000  

 

Amount to be Credited to B’s Capital=30,000X2
6
 =10,000  

 

Amount to be Credited to C’s Capital=30,000X1
6
 =5,000  

 

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

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

A’s Share Sacrificing/Gaining=3 –1
63
 =9 – 6
 18
 =3 (Sacrifice)
 18

 

B’s Share Sacrificing/Gaining=2 –1
63

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 =6 – 6
 18
 =Nil
C’s Share Sacrificing/Gaining=1 –1
63
 =3 – 6
 18
 =– 3(Gain)
 18

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WN *3 Adjustment of Goodwill: –

Amount to be Credited to A’s Capital=1,50,000X3
18
 =25,000  

 

Amount to be Debited to C’s Capital=1,50,000X3
18
 =25,000  

 

In the Books of _______________
DateParticulars
L.F.DebitCredit
2019     
April 1C’s Capital A/cDr 25,000 
 To A’s Capital A/c*3    25,000
 (Being adjustment made for Compensation of C’s, because he is gaining)    
 C’s Capital A/cDr 25,000 
 To A’s Capital A/c*3    25,000
 (Being adjustment make for the revaluation of assets and liabilities)    

 

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
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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