Question 32 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Q-32 - CH-6 - T.S. Grewal +2 Book 2019 - Solution-min
Q-32 - CH-6 - T.S. Grewal +2 Book 2019 - Solution-min


Question 32 Chapter 6 of +2-A


32. The Balance Sheet of X, Y, and Z who were sharing profits in the ratio of their capitals stood as follows on 31st March 2019:

LiabilitiesAmountAssets Amount
Sundry Creditors13,800Cash at Bank11,000
Capital A/cs:  Sundry Debtors 10,000 
X’s Capital 45,000 Less: Provision for Doubtful Debts2009,800
Y’s Capital30,000 Stock  16,000
Z’s Capital 15,00090,000Plant and Machinery 17,000
   Land and Building 50,000
  1,03,800  1,03,800

Y retired on 1st April 2019 and the following terms:

  1. Out of the insurance premium debited to Profit and Loss Account, 1,500 to be carried forward as Prepaid Insurance.
  2. Provision for Doubtful Debts to be brought up to 5% of Sundry Debtors.
  3. Land and Building to be appreciated by 20%.
  4. A provision of 4,000 is made in respect of outstanding bills for repairs.
    Goodwill of the firm was determined at 21,600.

Y’s share of goodwill is adjusted to that of X and Z who will share profits in the future in the ratio of 3: 1.
Pass necessary Journal entries and give the Balance Sheet after Y’s retirement.

The solution of Question 32 Chapter 6 of +2-A: –

Journal Entries


 Revaluation A/cDr. 4,300 
 To Prov. for Doubtful Debts A/c   300
 To Prov. for O/s Repair Bills A/c   4,000
 (Being provision created transferred to Revaluation Account )   
 Prepaid Insurance A/cDr. 1,500 
 Land and Building A/cDr. 10,000 
 To Asha’s Capital A/c   11,500
 (Being Increase in the value of assets transferred to revaluation account)   
 Revaluation A/cDr.  7,200 
 To X’s Capital A/c   3,600
 To Y’s Capital A/c   2,400
 To Z’s Capital A/c   1,200
 (Being Profit on revaluation transferred to capital accounts)   
 X’s Capital A/cDr. 1,500 
 Z’s Capital A/cDr. 10,000 
 To Y’s Capital A/c   11,500
 (Being adjustment for goodwill recorded in the books)   
 To Y’s Capital A/cDr. 39,600 
 To Y’s LoanA/c   39,600
 (Being balance of Y’s capital account transferred to Y’s loan account)



Balance Sheet
Sundry Creditors13,800Cash at Bank 11,000
Prov. for O/s Repair Bills4,000Sundry Debtors10,000 
Y’s Loan A/c 39,600Less: Prov. for D/D5009,500
Capital:  Stock 16,000
Disha’s Capital43,200 Prepaid Insurance 1,500
Kabir’s Capital14,40057,600Plant and Machinery17,000
   Land and Building60,000
  1,15,000  1,15,000

Working Note:-

Revaluation Account
To Prov. for Doubtful Debts300By Prepaid Insurance A/c1,500
To Prov. For O/s Repairs Bills4,000By Land And Building A/c10,000
To Profit transferred to    
X’s Capital3,600    
Y’s Capital2,400    
Z’s Capital1,2007,200   
  11,500  11,500


Partners’ Capital Account
Part.XY Z


To Y’s Capital A/c5,4001,800By Balance B/d45,00030,00015,000
To X’s Loan A/c39,600By X’s Capital A/c5,400
    By Z’s Capital A/c1,800
    By Revaluation A/c3,6002,400


To Balance c/d 43,20014,400    
 48,60039,60016,200 48,60039,60016,200

Working Note: –

i. Calculation of B’s share of goodwill

Old Ratio of X, Y, and Z  =  In their Capital Share
= 45,000 : 30,000 : 15,000

= 3: 2: 1

New Ratio of X and Z = 3:1

Gaining Ratio

X’s Gain=33


Y’s Gain=11


Gaining Ratio = 3: 1


Adjustment of Goodwill

Goodwill of the firm = Rs 21,600

Kanika’s Share of Goodwill=21,600X2
 =Rs 7,200  


This share of goodwill is to be distributed between X and Z in their gaining ratio i. e. 3:1

X’s Share=7,200X3
 =Rs 5,400/-  


Z’s Share=7,200X1
 =Rs 1,800/-  


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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