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

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

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
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

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    

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    

 

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 - Question 35 Chapter 6 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.