# Question 32 Chapter 4 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 32 Chapter 4 of +2-A

32. Following is the Balance Sheet of A and B, who shared Profits and Losses in the ratio of 2 : 1, as at 1st April, 2019:

 Liabilities Assets Capital A/cs: Land ad Building 2,90,000 A 3,00,000 Furniture 80,000 B 2,00,000 5,00,000 Stock 2,40,000 Reserve 1,50,000 Debtors 1,50,000 Creditors 2,00,000 Bank 60,000 Cash 30,000 8,50,000 8,50,000

On the above date, the partners changed their profit-sharing ratio to 3 : 2. For this purpose, the goodwill of the firm was valued at 3,00,000. The partners also agreed for the following:

1. The value of Land and Building will be 5,00,000;
2. Reserve is to be maintained at 3,00,000.
3. The total capital of the partners in the new firm will be 6,00,000, which will be shared by the partners in their new profit-sharing ratio.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the reconstituted firm.

The solution of Question 32 Chapter 4 of +2-A

 Revaluation A/c Particulars Amount Particulars Amount To Land and Building A/c 2,10,000 To Profit on Revaluation*1 2,10,000 A’s Capital A/c 1,40,000 B’s Capital A/c 70,000 2,10,000 2,10,000

 Partners’ Capital Accountsfor the year ended 31st March, 2019 Particulars A B Particulars A B To Revaluation A/c 1,80,000 1,20,000 By Balance B/d 3,00,000 2,00,000 To A’s Capita A/c *2 – 20,000 By Reserve A/C*2 1,00,000 50,000 By B’s Capital A/c*2 20,000 – To Cash A/c’s (B. fig) 20,000 – By B’s Capital A/c*2 1,40,000 70,000 By Cash A/c (B. fig) – 60,000 To Balance c/d 3,60,000 2,40,000 5,60,000 3,80,000 5,60,000 3,80,000

 Balance Sheetas on 01st April, 2019 Particulars Amount Particulars Amount Reserve 3,00,000 Land and Building 5,00,000 Creditors 2,00,000 Furniture 80,000 Capital A/c Stock 2,40,000 A 3,60,000 Debtors 1,50,000 B 2,40,000 Bank 60,000 Cash 70,000 19,40,000 19,40,000

 Cash Account Particulars Amount Particulars Amount To Balance B/d 30,000 By A’s Capital A/c 20,000 To B’s Capital A/c 60,000 By Balance C/d (B. Fig) 70,000 90,000 90,000

Working Note :

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

 Amount of A’s Capital = 2,10,000 X 2 3 = 1,40,000

 Amount of B’s Capital = 2,10,000 X 1 3 = 70,000

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

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

 A’s Share Sacrificing/Gaining = 2 – 3 3 5
 = 10 – 9 15
 = 1 (Sacrifice) 15

 B’s Share Sacrificing/Gaining = 1 – 2 3 5
 = 5 – 6 15
 = (-1) (Gain) 15

 Date Particulars L.F. Debit Credit 2019 B’s Capital A/c Dr 20,000 To A’s Capital A/c*1 20,000 (Being B compensate A)

WN *2 Calculation of Amount of Goodwill Debited/Credited to the Capital a/c : –

 A’s Capital Credited with = 3,00,000 X 1 15 = 20,000

 B’s Capital Credited with = 3,00,000 X 1 15 = 20,000

 Partner’s New Capital = Total of Debit side of Capital A/c – Total of Debit side of Capital A/c A’s New Capital = 5,60,000 – 1,80,000 = 3,80,000 B’s New Capital = 3,20,000 – 1,40,000 = 1,80,000 Total Combined Capital = 6,00,000

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

 Amount of A’s New Capital = 6,00,000 X 3 5 = 3,60,000

 Amount of B’s New Capital = 6,00,000 X 2 5 = 2,40,000

### 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

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