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Question 29 Chapter 4 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 29 Chapter 4 of +2-A
Question No.30 Chapter No.4 - T.S. Grewal +2 Book 2019-Solution

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Question 29 Chapter 4 of +2-A

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29. Balance Sheet of X and Y, who share profits and losses as 5 : 3, as at 1st April, 2019 is:

Liabilities Assets 
X’s Capital 52,000Goodwill8,000
Y’s Capital54,000Machinery38,000
General Reserve4,800Furniture  15,000
Sundry Creditors 5,000Sundry Debtors  33,000
Employees’ Provident Fund1,000Stock7,000
Workmen Compensation Reserve10,000Bank 25,000
  Advertisement Suspense A/c800
 1,26,800  1,26,800

On the above date, they decided to change their profit-sharing ratio to 3 : 5 and agreed upon the following:

  1. Goodwill be valued on the basis of two years’ purchase of the average profit of the last three years. Profits for the years ended 31st March,are: 2016-17 − 7,500; 2017-18 − 4,000; 2018-19 − 6,500.
  2. Machinery and Stock be revalued at 45,000 and 8,000 respectively.
  3. Claim on account of workmen compensation is 6,000.

Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm.

The solution of Question 29 Chapter 4 of +2-A

Revaluation A/c
Particulars
Amount ParticularsAmount
   By Machinery A/c7,000
   By Stock A/c8,000
     
To Profit on Revaluation*1 8,000  
X5,000   
Y3,000   
  8,000 8,000

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Partners’ Capital Accounts
for the year ended 31st March, 2019
Particulars
XYParticulars
XY
To Advertisement Suspense A/c500300By Balance B/d52,00054,000
To Goodwill A/c *25,0003,000By General Reserve A/c3,0001,800
To X’s Capital A/c *33,000By WCF A/c2,5001,500
   By Revaluation A/c5,0003,000
   By Y’s Capital A/c *33,000
To Balance c/d
60,000
54,000
   
 65,50060,300
  65,50060,300

 

Balance Sheet
as on 01st April, 2019
Particulars
Amount Particulars

Amount
Sunday Creditors 5,000Machinery 45,000
Outstanding Expenses 15,000Furniture 15,000
Employees’ Provident Fund 1,000Sundry Debtors 33,000
Workmen’s Compensation Reserve 6,000Stock 8,000
Capital A/c  Bank 25,000
X58,500    
Y55,5001,14,000   
  1,26,000   1,26,000

Working Note : 

WN *1 Adjustment of Profit on revaluation: –

Amount to be Credited to X’s Capital=8,000X5
8
 =5,000  

 

Amount to be Credited to Y’s Capital=8,000X3
8
 =3,000  

WN *2 Adjustment of Existing goodwill already in the books: –

Amount to be Credited to X’s Capital=8,000X5
8
 =5,000  

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Amount to be Credited to Y’s Capital=8,000X3
8
 =3,000  

 

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

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

X’s Share Sacrificing/Gaining=5 –3
88
 =5 – 2
 8
 =2 (Sacrifice)
 8

 

Y’s Share Sacrificing/Gaining=3 –5
88
 =3 – 5
 8
 =(-2)(Gain)
 36

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WN *1 Adjustment of General Reserve: –

Amount to be Debited to X’s Capital=42,000X2
8
 =4,000  

 

Amount to be Credited to Y’s Capital=42,000X2
8
 =4,000  

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WN *3 Calculation of New Goodwill

Average Profit=Sum of all year Profit
  Numbers of Year
 =7,500 + 4,000 + 6,500
 3
 =6,000
Goodwill=Average Profit X Number of Years of Purchase
 =6,000 X 2
 =12,000
Amount to be Debited to X’s Capital=12,000X2
8
 =3,000  

 

 

Amount to be Debited to Y’s Capital=12,000X2
8
 =3,000  

 

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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