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Question 35 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 35 Chapter 6 of +2-A
Question 35 Chapter 6 of +2-A

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Question 35 Chapter 6 of +2-A

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35. X, Y, and Z were in partnership sharing profits and losses in the proportions of 3: 2: 1. On 1st April 2019, Y retired from the firm. On that date, their Balance Sheet was:

LiabilitiesAmountAssets Amount
Trade Creditors30,000Cash in Hand 15,000
Bills Payable45,000Cash at Bank 75,000
Expenses Owing 45,000Debtors  1,50,000
General Reserve 1,35,000Stock  1,20,000
Capital A/cs:  Factory Premises 2,25,000
X’s Capital 1,50,000 Machinery80,000
Y’s Capital1,50,000 Loose Tools40,000
Z’s Capital 1,50,0004,50,000   
  7,05,000  7,05,000

The terms were:

  1. Goodwill of the firm was valued at 1,35,000 and adjustment in this respect was to be made in the continuing Partners’ Capital Accounts without raising Goodwill Account.
  2. Expenses Owing to be brought down to 37,500.
  3. Machinery and Loose Tools are to be valued @ 10% less than their book value.
  4. Factory Premises are to be revalued at 2,43,000.

Show Revaluation Account, Partners’ Capital Accounts and prepare the Balance Sheet of the firm after the retirement of Y.

The solution of Question 35 Chapter 6 of +2-A: –

Revaluation Account
Particular
AmountParticularAmount
To Machinery A/c8,000By Expenses Owing A/c7,500
(80,000 × 10%) By Factory Premises A/c18,000
To Loose Tools A/c4,000  
(40,000 × 10%)   
    
To Profit transferred to    
X’s Capital6,750    
Y’s Capital4,500    
Z’s Capital2,25013,500   
  25,500  25,500

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Partners’ Capital Account
Part.XY Z

Part.

XY Z
To Y’s Capital A/c (Goodwill)33,75011,250By Balance B/d1,50,0001,50,0001,50,000
    By General Reserve67,50045,00022,500
    By Revaluation A/c6,7504,5002,250
To Y’s Loan A/c2,44,500By X’s Capital A/c (Goodwill)33,750
To Balance c/d 1,90,5001,63,500By Z’s Capital A/c (Goodwill)11,250
 2,24,2502,44,5001,74,750 2,24,2502,44,5001,74,750

 

Balance Sheet
Liabilities
AmountAssetsAmount
Sundry Creditors30,000Cash in Hand 15,000
Bills Payable45,000Cash at Bank75,000
Expenses Owing37,500Debtors1,50,000
  Stock1,20,000
Y’s Loan A/c 2,44,500Factory Premises 2,43,000
Capital:  Machinery 72,000
A’s Capital1,90,500 Loose tools 36,000
B’s Capital1,63,5003,54,000   
     
  7,11,000  7,11,000

 

Working Note:-

Calculation of Gaining Ratio

Old Ratio of X, Y, and Z = 3:2:1

New Ratio of N and S = 3:2

Note:- “Because the new ratio or gaining ratio is not given in the question so they will share gain in the old sharing ratio. So the gaining ratio will be:”

Gaining Ratio of X and Z = 3: 1

Adjustment of Goodwill

Goodwill of the firm = Rs 1,35,000

Y’s Share of Goodwill=1,35,000X2
6
     
 =Rs 45,000  

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Gaining Ratio of X and Z = 3: 1

X’s gain=45,000X3
4
     
 =Rs 33,750  

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Z’s Sacrifice=45,000X1
4
     
 =Rs 11,250  

 

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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