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

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

Question 29 Chapter 4 of +2-A

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 52,000 Goodwill 8,000 Y’s Capital 54,000 Machinery 38,000 General Reserve 4,800 Furniture 15,000 Sundry Creditors 5,000 Sundry Debtors 33,000 Employees’ Provident Fund 1,000 Stock 7,000 Workmen Compensation Reserve 10,000 Bank 25,000 Advertisement Suspense A/c 800 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 Particulars Amount By Machinery A/c 7,000 By Stock A/c 8,000 To Profit on Revaluation*1 8,000 X 5,000 Y 3,000 8,000 8,000

 Partners’ Capital Accountsfor the year ended 31st March, 2019 Particulars X Y Particulars X Y To Advertisement Suspense A/c 500 300 By Balance B/d 52,000 54,000 To Goodwill A/c *2 5,000 3,000 By General Reserve A/c 3,000 1,800 To X’s Capital A/c *3 – 3,000 By WCF A/c 2,500 1,500 By Revaluation A/c 5,000 3,000 By Y’s Capital A/c *3 3,000 – To Balance c/d 60,000 54,000 65,500 60,300 65,500 60,300

 Balance Sheetas on 01st April, 2019 Particulars Amount Particulars Amount Sunday Creditors 5,000 Machinery 45,000 Outstanding Expenses 15,000 Furniture 15,000 Employees’ Provident Fund 1,000 Sundry Debtors 33,000 Workmen’s Compensation Reserve 6,000 Stock 8,000 Capital A/c Bank 25,000 X 58,500 Y 55,500 1,14,000 1,26,000 1,26,000

Working Note :

WN *1 Adjustment of Profit on revaluation: –

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

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

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

 Amount to be Credited to Y’s Capital = 8,000 X 3 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 8 8
 = 5 – 2 8
 = 2 (Sacrifice) 8

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

WN *1 Adjustment of General Reserve: –

 Amount to be Debited to X’s Capital = 42,000 X 2 8 = 4,000

 Amount to be Credited to Y’s Capital = 42,000 X 2 8 = 4,000

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 = 12,000 X 2 8 = 3,000

 Amount to be Debited to Y’s Capital = 12,000 X 2 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)

• 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