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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:
| Liabilities | Amount | Assets | Amount | ||
| Trade Creditors | 30,000 | Cash in Hand | 15,000 | ||
| Bills Payable | 45,000 | Cash at Bank | 75,000 | ||
| Expenses Owing | 45,000 | Debtors | 1,50,000 | ||
| General Reserve | 1,35,000 | Stock | 1,20,000 | ||
| Capital A/cs: | Factory Premises | 2,25,000 | |||
| X’s Capital | 1,50,000 | Machinery | 80,000 | ||
| Y’s Capital | 1,50,000 | Loose Tools | 40,000 | ||
| Z’s Capital | 1,50,000 | 4,50,000 | |||
| 7,05,000 | 7,05,000 | ||||
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The terms were:
- 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.
- Expenses Owing to be brought down to 37,500.
- Machinery and Loose Tools are to be valued @ 10% less than their book value.
- Factory Premises are to be revalued at 2,43,000.
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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 |
Amount | Particular | Amount | ||
| To Machinery A/c | 8,000 | By Expenses Owing A/c | 7,500 | ||
| (80,000 × 10%) | By Factory Premises A/c | 18,000 | |||
| To Loose Tools A/c | 4,000 | ||||
| (40,000 × 10%) | |||||
| To Profit transferred to | |||||
| X’s Capital | 6,750 | ||||
| Y’s Capital | 4,500 | ||||
| Z’s Capital | 2,250 | 13,500 | |||
| 25,500 | 25,500 | ||||
| Partners’ Capital Account |
|||||||
| Part. | X | Y | Z |
Part. |
X | Y | Z |
| To Y’s Capital A/c (Goodwill) | 33,750 | – | 11,250 | By Balance B/d | 1,50,000 | 1,50,000 | 1,50,000 |
| By General Reserve | 67,500 | 45,000 | 22,500 | ||||
| By Revaluation A/c | 6,750 | 4,500 | 2,250 | ||||
| To Y’s Loan A/c | – | 2,44,500 | – | By X’s Capital A/c (Goodwill) | – | 33,750 | – |
| To Balance c/d | 1,90,500 | – | 1,63,500 | By Z’s Capital A/c (Goodwill) | – | 11,250 | – |
| 2,24,250 | 2,44,500 | 1,74,750 | 2,24,250 | 2,44,500 | 1,74,750 | ||
| Balance Sheet |
|||||
| Liabilities |
Amount | Assets | Amount | ||
| Sundry Creditors | 30,000 | Cash in Hand | 15,000 | ||
| Bills Payable | 45,000 | Cash at Bank | 75,000 | ||
| Expenses Owing | 37,500 | Debtors | 1,50,000 | ||
| Stock | 1,20,000 | ||||
| Y’s Loan A/c | 2,44,500 | Factory Premises | 2,43,000 | ||
| Capital: | Machinery | 72,000 | |||
| A’s Capital | 1,90,500 | Loose tools | 36,000 | ||
| B’s Capital | 1,63,500 | 3,54,000 | |||
| 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
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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 | = | 1,35,000 | X | 2 |
| 6 | ||||
| = | Rs 45,000 |
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Gaining Ratio of X and Z = 3: 1
| X’s gain | = | 45,000 | X | 3 |
| 4 | ||||
| = | Rs 33,750 |
| Z’s Sacrifice | = | 45,000 | X | 1 |
| 4 | ||||
| = | Rs 11,250 |
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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. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
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
