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Question 36 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 36 Chapter 6 of +2-A
Question 36 Chapter 6 of +2-A

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Question 36 Chapter 6 of +2-A

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36. Pankaj, Naresh, and Saurabh are partners sharing profits in the ratio of 3:2:1. On 1st April 2019, Naresh retired on that date, Balance Sheet of the firm was as follows:

LiabilitiesAmountAssets Amount
General Reserve12,000Bank  7,600
Sundry Creditors 15,000Debtors 6,000 
Bills Payable 12,000Less: Provision for Doubtful Debts  4005,600
Outstanding Salary2,200Stock  9,000
Provision for Legal Damages6,000Furniture  41,000
Capital A/cs:  Premises 80,000
Pankaj’s Capital 46,000    
Naresh’s Capital30,000    
Saurabh’s Capital 20,00096,000   
  1,43,200  1,43,200

Additional Information:

  1. Premises have appreciated by 20%, stock depreciated by 10%, and provision for doubtful debts was to be made 5% on debtors. Further, provision for legal damages is to be made for 1,200 and furniture to be brought up to 45,000.
  2. Goodwill of the firm is valued at 42,000.
  3. 26,000 from Naresh’s Capital Account be transferred to his Loan Account and the balance be paid through the bank: if required, the necessary loan may be obtained from the bank.
  4. The new profit-sharing ratio of Pankaj and Saurabh is decided to be 5: 1

Give the necessary Ledger Accounts and Balance Sheet of the firm after Naresh’s retirement

The solution of Question 36 Chapter 6 of +2-A: –

Revaluation Account
Particular
AmountParticularAmount
To Stock A/c900By Premises A/c16,000
To Provision for Legal Damages A/c1,200By Provision for Doubtful Debts A/c100
To Revaluation Profit A/c1,500By Furniture A/c4,000
    
To Profit transferred to    
Pankaj’s Capital A/c9,000    
Naresh’s Capital A/c6,000    
Saurabh’s Capital A/c3,00018,000   
  20,100  20,100

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Partners’ Capital Account
Part.XY Z

Part.

XY Z
To Naresh’s Capital A/c
(Goodwill)
14,000By Balance B/d46,00030,00020,000
    By General Reserve6,0004,0002,000
To Naresh’s Loan A/c26,000By Revaluation A/c9,0006,0003,000
To Bank A/c28,000By Pankaj’s Capital A/c (Goodwill)14,000
To Balance c/d 47,00025,000    
 61,00054,00025,000 61,00054,00025,000

 

Bank Account
Liabilities
AmountAssetsAmount
To Balance b/d7,600By Naresh’s Capital A/c 28,000
To Bank Loan A/c (Balancing Figure)20,400  
    
  28,000  28,000

 

Balance Sheet
Liabilities
AmountAssetsAmount
Sundry Creditors15,000Debtor6,000 
Bills Payable12,000Less: Provision3005,700
Bank Loan20,400Stock8,100
Outstanding Salaries2,200Furniture45,000
Provision for Legal Damages7,200Premises96,000
Naresh’s Loan 26,000   
Capital:     
Pankaj’s Capital47,000    
Saurabh’s Capital25,00072,000  
  1,54,800  1,54,800

 

Working Note:-

Calculation of Gaining Ratio

Old Ratio of X, Y, and Z = 3:2:1
Naresh retires from the firm.

New Ratio of N and S = 5:1

Gaining Ratio = New Ratio – Old Ratio

Pankaj’s Gaining Share=53
66
     
 =53
 6
     
 =2  
 6  

 

Saurabh’s Gaining Share=11
66
     
 =11
 6
     
 =0  
 6  

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Adjustment of Goodwill

Goodwill of the firm = Rs 42,000

Naresh’s Share of Goodwill=42,000X2
6
     
 =Rs 14,000  

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Pankaj’s gain = Pankaj’s gaining the share of Naresh So He will pay the whole of the amount of Naresh’s share of Goodwill

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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