Question 30 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 30 Chapter 6 of +2-A

Question 30 Chapter 6 of +2-A

30. X, Y, and Z were partners in a firm sharing profits in the ratio of 2 : 2: 1. Their Balance Sheet as of 31st March 2019 was:

Liabilities   Amount Assets Amount
Creditors   49,000 Cash 8,000
Reserve   18,500 Debtors 19,000
Capital A/cs     Stock 42,000
X 82,000   Building 2,07,000
Y 60,000   Patents 9,000
Z 75,500 2,17,500    
    2,85,000   2,85,000

Y retired on 1st April 2019 on the following terms:
a) Goodwill of the firm was valued at 70,000 and was not to appear in the books.
b) Bad Debts amounted to 2,000 were to be written off.
c) Patents were considered valueless.
Prepare Revaluation Account, Partners’ Capital Accounts, and the Balance Sheet of X and Z after Y’s retirement.

The solution of Question 30 Chapter 6 of +2-A: –

Revaluation Account
Particular
Amount Particular Amount
Bad Debts   2,000      
Patents   9,000      
      Loss transferred to:    
      X’s Capital 4,400  
      Y’s Capita 4,400  
      Z’s Capital 2,200 11,000
    11,000     11,000

 

Partners’ Capital Account
Part. X Y Z

Part.

X Y Z
To Revaluation 4,400 4,400 2,200 By Balance B/d 82,000 60,000 75,500
To Y’s Capital A/c 18,667 9,333 By Reserve Old Ratio 7,400 7,400 3,700
To Y’s Loan A/c 91,000 By X’s Capital A/c 18,667
        By Z’s Capital A/c 9,333

To Balance c/d 66,333 67,667        
  89,400 95,400 79,200   89,400 95,400 79,200

 

Balance Sheet
Liabilities
Amount Assets Amount
Creditors   49,000 Cash   8,000
Y’s Loan   91,000 Debtors  19000 −2000 17,000
Capital:     Stock   42,000
X 66,333   Building   2,07,000
Z 67,667 1,34,000      
    2,74,000     2,74,000

Working Note:-

Calculation of Gaining Ratio

Old Ratio X, Y and Z = 2: 2: 1
Y retires from the firm
∴Gaining Ratio = 2 : 1

Adjustment of Goodwill

Goodwill of the firm = Rs 70,000

 

Y’s Share of Goodwill = 70,000 X 2
5
         
  = Rs 28,000    

 

This share of goodwill is to be distributed between X and Z in their gaining ratio i. e. 2: 1

X‘s Share = 28,000 X 2
3
         
  = Rs 18,667    

 

Z‘s Share = 28,000 X 1
3
         
  = Rs 9,333    

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

 

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2 Book 1 min - Question 30 Chapter 6 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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