Question 34 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Q-34 - CH-6 - T.S. Grewal +2 Book 2019 - Solution-min
Q-34 - CH-6 - T.S. Grewal +2 Book 2019 - Solution-min


Question 34 Chapter 6 of +2-A


34. A, B and C are partners in a firm, sharing profits and losses as A 1/3, B 1/2, and C 1/6 respectively. The Balance Sheet of the firm as of 31st March 2019 was:

LiabilitiesAmountAssets Amount
Capital A/cs:  Building  50,000
A’s Capital 30,000 Plant and Machinery 40,000
B’s Capital40,000 Furniture 10,000
C’s Capital 25,00095,000Stock  25,000
General Reserve16,000Debtors 18,000 
Creditors 25,000Less: Provision for Doubtful Debts 50017,500
Loan Payable 15,000Cash in Hand8,500
  1,51,000  1,51,000


C retires on 1st April 2019 subject to the following adjustments:

  1. Goodwill of the firm is valued at 24,000. C’s share of goodwill is adjusted into the accounts of A and B who are going to share in the future in the ratio of 3: 2.
  2. Plant and Machinery to be reduced by 10% and Furniture by 5%.
  3. Stock to be appreciated by 15% and Building by 10%.
  4. Provision for Doubtful Debts to be raised to 2,000.

Pass Journal entries to record the above transactions in the books of the firm and show the Profit and Loss Adjustment Account, Capital Account of C, and the Balance Sheet of the firm after C’s retirement.


The solution of Question 34 Chapter 6 of +2-A: –

Journal Entries

 Profit and Loss Adjustment A/cDr. 6,000 
 To Plant and Machinery A/c   4,000
 To Provision for Doubtful Debts A/c  1,500
 To Furniture A/c   500
 ((Being Decrease in the value of assets transferred to Profit and Loss Adjustment account)   
 Stock A/cDr. 3,750 
 Factory Building A/cDr. 5,000 
 To Profit & Loss Adjustment A/c   8,750
 (Being increase in the value of assets transferred to Revaluation account)   
 Profit and Loss Adjustment A/cDr.  2,750 
 To A’s Capital A/c   917
 To B’s Capital A/c   1,375
 To C’s Capital A/c   458
 (Being balance of Profit and Loss Adjustment account transferred to partners’ capital accounts)   
 A’s Capital A/cDr. 6,400 
 To B’s Capital A/c   2,400
 To C’s Capital A/c   4,000
 (Being adjustment of goodwill recorded in the books)   
 C’s Capital A/cDr. 32,125 
 To C’s Loan A/c   32,125
 (Being balance of C’s capital account transferred to C’s loan account)

 Reserve Fund A/cDr.  16,000 
 To A’s Capital A/c   5,333
 To B’s Capital A/c   8,000
 To C’s Capital A/c   2,667
 (Being reserve transferred to partners’ capital accounts)   


Profit and Loss Adjustment Account
To Plant and Machinery A/c4,000By Stock A/c3,750
(40,000 × 10%) (25,000 ×15%) 
To Furniture A/c500By Factory Building A/c5,000
(10,000 × 5%) (50,000 ×10%) 
To Provision for Doubtful Debts A/c1,500  
(2,000– 500)   
To Profit transferred to    
A’s Capital917    
B’s Capital1,375    
C’s Capital4582,750   
  8,750  8,750



Partners’ Capital Account
Part.AB C


To B’s Capital A/c (Goodwill)2,400By Balance B/d30,00040,00025,000
To C’s Capital A/c (Goodwill)4,000By Reserve Fund5,3338,0002,667
    By Revaluation A/c9171,375458
To X’s Loan A/c32,125By A’s Capital A/c (Goodwill)2,400


To Balance c/d 43,20051,775    
 36,25051,77532,125 36,25051,77532,125


Balance Sheet
Sundry Creditors25,000Factory Building 55,000
Loan Payable15,000Plant and Machinery36,000
C’s Loan A/c 32,125Furniture 9,500
Capital:  Stock 28,750
A’s Capital29,850 Sundry Debtors18,000 
B’s Capital51,77581,625Less: Provision2,00016,000
   Cash in Hand8,500
  1,15,000  1,15,000


Working Note:-

Calculation of Gaining Ratio

Old Ratio of A, B, and C =  1/3: 1/2: 1/6

= 2/6:3/6:1/6 (Make base equal of all)



New Ratio of N and S = 3:2

Gaining Ratio = New Ratio – Old Ratio

A’s Gaining Share=32


B’s Gaining Share=23


Mr. B is sacrificing. 

Adjustment of Goodwill

Goodwill of the firm = Rs 24,000

C’s Share of Goodwill=24,000X1
 =Rs 4,000  


A’s gain=24,000X8
 =Rs 6,400  



B’s Sacrifice=24,000X3
 =Rs 2,400  

Calculation of Excess/Deficit Provision for Doubtful Debts

Required Provision = 5%

Closing Debtors                                = Debtors – Bad Debts
(after writing off Bad Debts)

Closing Debtors
(after writing off Bad Debts)

=DebtorsBad Debts
 =1,29,000 /-  


New Provision on Closing Debtors=Closing Debtors XRate of Provision


Balance of Old Provision after Bad Debts=Old ProvisionBad debts


Excess/(Deficit) Provision=Old ProvisionOld Provision




Calculation of G’s Loan Balance

Amount due to G=Opening Capital+All CreditsAll Debits
 =4,50,000+(45,000+45,000)(37,500 +81,225)

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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