Question 30 Chapter 4 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 30 Chapter 4 of +2-A

Question 30 Chapter 4 of +2-A

30. Ram, Mohan, Sohan and Hari were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1. On 1st April, 2016, their Balance Sheet was as follows:

Liabilities     Assets  
Capital A/cs:     Fixed Assets 9,00,000
Ram 4,00,000   Current Assets 5,20,000
Mohan 4,50,000      
Sohan 2,50,000      
Hari 2,00,000  13,00,000     
Workmen Compensation Reserve   1,20,000      
         
    14,20,000     14,20,000

From the above date, the partners decided to share the future profits in the ratio of 1 : 2 : 3 : 4. For this purpose the goodwill of the firm was valued at 1,80,000. The partners also agreed for the following:

  1. The Claim for workmen compensation has been estimated at 1,50,000.
  2. Adjust the capitals of the partners according to the new profit-sharing ratio by opening Partners’ Current Accounts.
    Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the reconstituted firm.

 

 

 

The solution of Question 30 Chapter 4 of +2-A

 

Revaluation A/c
Particulars
Amount Particulars

Amount
To Provision for Workmen Compensation Claim A/c   30,000 By Profit on Revaluation*1   30,000
      Ram’s Capital A/c 12,000  
      Mohan’s Capital A/c 9,000  
      Sohan’s Capital A/c 6,000  
      Hari’s Capital A/c 3,000  
    30,000     30,000

Dr

Partners’ Capital Accounts
for the year ended 31st March, 2019

Particulars

Ram Mohan Sohan Hari
To Revaluation A/c 12,000 9,000 6,000 3,000
To Ram’s Capita A/c *2     13,500 40,500
To Mohan’s Capital A/c *2   4,500 13,500
To Current A/c’s (B. fig) 3,15,000 2,05,000    
To Balance c/d
1,27,000
2,54,000
3,81,000
5,08,000
  4,54,000 4,68,000
4,05,000
5,65,000

Cr

Partners’ Capital Accounts
for the year ended 31st March, 2019

Particulars

Ram Mohan Sohan Hari
By Balance B/d 4,00,000 4,50,000 2,50,000 2,00,000
By Sohan’s Capital A/C*2 13,500 13,500    
By Hari’s Capital A/c*2 40,500 40,500    
By Current A/c (B. fig)     1,55,000 3,65,000
         
  4,54,000 4,68,000
4,05,000
5,65,000

 

 

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

Amount
Provision of Claim against WCF   1,50,000 Fixed Assets   9,00,000
Capital A/c     Current Assets   5,20,000
Ram 58,500   Current A/c    
Mohan 55,500   Ram 3,15,000  
Sohan 58,500   Mohan 2,05,000 5,20,000
Hari 55,500 12,70,000      
Current A/c          
Sohan 1,55,000        
Hari 3,65,000 5,20,000      
    19,40,000     19,40,000

 

Working Note : 

WN *1 Calculation of Total Combined Capital in New Profit Sharing Ratio: –

Amount of Ram’s Capital = 30,000 X 4
10
  = 12,000    

 

Amount of Mohan’s Capital = 30,000 X 3
10
  = 9,000    

 

Amount of Sohan’s Capital = 30,000 X 2
10
  = 6,000    

 

Amount of Hari’s Capital = 30,000 X 1
10
  = 3,000    

 

Old Ratio of X, & Y = 4 : 3 : 2 : 1  
New Ratio of X, & Y = 1 : 2 : 3 : 4

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

Ram’s Share Sacrificing/Gaining = 4  – 1
10 10
  = 4 – 1
  10
  = 3  (Sacrifice)
  10

 

Mohan’s Share Sacrificing/Gaining = 3  – 2
10 10
  = 3 – 2
  10
  = 1 (Sacrifice)
  10

 

Sohan’s Share Sacrificing/Gaining = 2  – 3
10 10
  = 2 – 3
  10
  = (-1) (Gain)
  10

 

Hari’s Share Sacrificing/Gaining = 1  – 4
10 10
  = 1 – 4
  10
  = (-3) (Gain)
  10
  1. Sohan will compensate Ram and Mohan in the ratio 3 : 1
  2. Hari will compensate Ram and Mohan in the ratio of 3 : 1

 

Date Particulars
L.F. Debit Credit
2019 Sohan’s Capital A/c Dr   18,000  
  Hari’s Capital A/c Dr   54,000  
  To Ram’s Capital A/c*1       18,000
  To Mohan’s Capital A/c*1       54,000
  (Being Sohan and Hari compensate ram and Mohan)        

 

 

WN *2 Calculation of Adjusted Capital

 

Partner’s New Capital = Total of Debit side of Capital A/c – Total of Debit side of Capital A/c
Ram’s New Capital = 4,54,000 – 12,000
  = 4,42,000  
Mohan’s New Capital = 4,68,000 – 9,000
  = 4,59,000  
Sohan’s New Capital = 2,50,000 – 24,000
  = 2,26,000  
Hari’s New Capital = 2,00,000 – 57,000
  = 1,43,000  
Total Combined Capital = 12,70,000
 

WN *3 Calculation of Total Combined Capital in New Profit Sharing Ratio: –

 

Amount of Ram’s New Capital = 12,70,000 X 1
10
  = 1,27,000    

 

Amount of Mohan’s New Capital = 12,70,000 X 2
10
  = 2,54,000    

 

Amount of Sohan’s New Capital = 12,70,000 X 3
10
  = 3,81,000    

 

 

Amount of Hari’s New Capital = 12,70,000 X 4
10
  = 5,08,000    

 

 

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 - Question 30 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

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.