# Question 28 Chapter 4 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 28 Chapter 4 of +2-A

28. X, Y and Z are partners in a firm sharing profits and losses as 5 : 4 : 3. Their Balance Sheet as at 31st March, 2019 was:

 Liabilities Assets Sundry Creditors 40,000 Cash at Bank 40,000 Outstanding Expenses 15,000 Sundry Debtors 2,10,000 General Reserve 75,000 Stock 3,00,000 Capital A/c Furniture 60,000 X 4,00,000 Plant and Machinery 4,20,000 Y 3,00,000 Z 2,00,000 8,75,000 10,40,000 10,40,000

From 1st April, 2019, they agree to alter their profit-sharing ratio as 4 : 3 : 2. It is also decided that:

1. Furniture be taken at 80% of its value.
2. Stock be appreciated by 20%.
3. Plant and Machinery be valued at 4,00,000.
4. Outstanding Expenses be increased by 13,000.
Partners agreed that altered values are not to be recorded in the books and they also do not want to distribute the General Reserve.
You are required to pass a single Journal entry to give effect to the above. Also, prepare Balance Sheet of the new firm.

The solution of Question 28 Chapter 4 of +2-A

 In the Books of _______________ Date Particulars L.F. Debit Credit 2019 X’s Capital A/c Dr 2,500 To Z’s Capital A/c*1 2,500 (Being adjustment made for general reserve)

 Balance Sheetas on 01st April, 2019 Particulars Amount Particulars Amount Sunday Creditors 40,000 Cash at Bank 40,000 Outstanding Expenses 15,000 Sundry Debtors 2,10,000 General Reserve 75,000 Stock 3,00,000 Capital A/c *2 9,00,000 Furniture 60,000 X 3,97,500 Plant and Machinery 4,20,000 Y 3,00,000 Z 2,02,500 10,30,000 10,30,000

Working Note :

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

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

 X’s Share Sacrificing/Gaining = 5 – 4 12 9
 = 15 – 16 36
 = (-1) (Gain) 36

 Y’s Share Sacrificing/Gaining = 4 – 3 12 9
 = 12 – 12 36 = Nil

 Z’s Share Sacrificing/Gaining = 3 – 2 12 9
 = 9 – 8 36
 = 1 (Sacrifice) 36

Calculation of Profit/loss on Revaluation : –

 Revaluation A/c Particulars Amount Particulars Amount To Furniture A/c 12,000 By Stock A/c 60,000 To Plant and Machinery A/c 20,000 To Outstanding Expenses A/c 13,000 To Profit on Revaluation*2 15,000 60,000 60,000

WN *1 Adjustment of Profit on Revaluation and General Reserve

 Amount for Adjustment = Profit on Revaluation + General Reserve = 15,000 + 7,500 = 90,000

 Amount to be Debited to X’s Capital = 90,000 X 1 36 = 2,500

 Amount to be Credited to Z’s Capital = 90,000 X 1 36 = 2,500

WN *2 Calculation of Balances of the Partners’ Capital account

 Partners’ Capital Accountsfor the year ended 31st March, 2019 Particulars X Y Z Particulars X Y Z To Z’s Capital A/c 2,500 – – By Balance B/d 4,00,000 3,00,000 2,00,000 By X’s Capital A/c – – 2,500 To Balance c/d 3,97,500 3,00,000 2,02,500 4,00,000 3,00,000 2,02,500 4,00,000 3,00,000 2,02,500

### 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