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

Question 28 Chapter 4 of +2-A

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 Sheet
as 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 Accounts
for 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)

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 28 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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