# Question 27 Chapter 4 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 27 Chapter 4 of +2-A

27. A and B are partners sharing profits in the ratio of 4 : 3. Their Balance Sheet as at 31st March, 2019 stood as:

 Liabilities Assets Sundry Creditors 28,000 Cash 20,000 Reserve 42,000 Sundry Debtors 1,20,000 Capital A/c Stock 1,40,000 A 2,40,000 Fixed Assets 1,50,000 B 1,20,000 3,60,000 4,30,000 2,75,000

They decided that with effect from 1st April, 2019, they will share profits and losses in the ratio of 2:1 For this purpose they decided that:

1. Fixed Assets are to be reduced by 10%.
2. A Provision for Doubtful Debts of 6% be made on Sundry Debtors.
Stock be valued at 1,90,000.
3. An amount of 3,700 included in Creditors is not likely to be claimed .
Partners decided to record the revised values in the books. However, they do not want to disturb the Reserve. You are required to pass Journal entries, prepare Capital Accounts of Partners and the revised Balance Sheet

The solution of Question 27 Chapter 4 of +2-A

 In the Books of _______________ Date Particulars L.F. Debit Credit 2019 A’s Capital A/c Dr 4,000 To B’s Capital A/c*3 4,000 (Being adjustment make for the revaluation of assets and liabilities)

 Revaluation A/c Particulars Amount Particulars Amount To Fixed Assets A/c 15,000 By Stock A/c 50,000 To Provision for Doubtful Debts A/c 1, 20, 000 × 6 7,200 By Creditors A/c 3,700 To Profit on Revaluation*2 31,500 A 18,000 B 13,500 53,700 53,700

 Partners’ Capital Accountsfor the year ended 31st March, 2019 Particulars A B Particulars A B To B’s Capital A/c 4,000 By Balance B/d 2,40,000 1,20,000 By Revaluation A/c 18,000 13,500 By A’s Capital A/c – 4,000 To Balance c/d 2,54,000 1,37,500 2,58,000 1,37,500 2,58,000 1,37,500

 Balance Sheetas on 01st April, 2019 Particulars Amount Particulars Amount Sunday Creditors 28,000 Cash 20,000 3,700 24,300 Sundry Debtors 1,20,000 General Reserve 42,000 Less: Provision for Doubtful Debts. 7, 200 1,12,800 Capital A/c 44,000 Stock 1,90,000 A 2,54,000 20,000 Fixed Assets (1,50,000– 15,000) 1,35,000 B 1,37,500 4,57,800 4,57,800

Working Note :

 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

 A’s Share Sacrificing/Gaining = 4 – 2 7 3
 = 12 – 14 21
 = -3 (Gain) 21

 B’s Share Sacrificing/Gaining = 3 – 1 7 3
 = 9 – 7 21
 = 2 (Sacrifice) 21

WN *1 Adjustment of General Reserve: –

 Amount to be Debited to A’s Capital = 42,000 X 2 21 = 4,000

 Amount to be Credited to B’s Capital = 42,000 X 2 21 = 4,000

WN *2 Adjustment of Profit on revaluation : –

 Amount to be Credited to A’s Capital = 31,500 X 4 7 = 18,000

 Amount to be Credited to B’s Capital = 31,500 X 3 7 = 13,500

### 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)

• 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