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

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:

Liabilities Amount Assets  Amount
General Reserve 12,000 Bank    7,600
Sundry Creditors  15,000 Debtors  6,000  
Bills Payable  12,000 Less: Provision for Doubtful Debts   400 5,600
Outstanding Salary 2,200 Stock    9,000
Provision for Legal Damages 6,000 Furniture    41,000
Capital A/cs:    Premises   80,000
Pankaj’s Capital  46,000        
Naresh’s Capital 30,000        
Saurabh’s Capital  20,000 96,000      
    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
Amount Particular Amount
To Stock A/c 900 By Premises A/c 16,000
To Provision for Legal Damages A/c 1,200 By Provision for Doubtful Debts A/c 100
To Revaluation Profit A/c 1,500 By Furniture A/c 4,000
       
To Profit transferred to        
Pankaj’s Capital A/c 9,000        
Naresh’s Capital A/c 6,000        
Saurabh’s Capital A/c 3,000 18,000      
    20,100     20,100

 

Partners’ Capital Account
Part. X Y Z

Part.

X Y Z
To Naresh’s Capital A/c
(Goodwill)
14,000 By Balance B/d 46,000 30,000 20,000
        By General Reserve 6,000 4,000 2,000
To Naresh’s Loan A/c 26,000 By Revaluation A/c 9,000 6,000 3,000
To Bank A/c 28,000 By Pankaj’s Capital A/c (Goodwill) 14,000
To Balance c/d 47,000 25,000        
  61,000 54,000 25,000   61,000 54,000 25,000

 

Bank Account
Liabilities
Amount Assets Amount
To Balance b/d 7,600 By Naresh’s Capital A/c   28,000
To Bank Loan A/c (Balancing Figure) 20,400    
       
    28,000     28,000

 

Balance Sheet
Liabilities
Amount Assets Amount
Sundry Creditors 15,000 Debtor 6,000  
Bills Payable 12,000 Less: Provision 300 5,700
Bank Loan 20,400 Stock 8,100
Outstanding Salaries 2,200 Furniture 45,000
Provision for Legal Damages 7,200 Premises 96,000
Naresh’s Loan   26,000      
Capital:          
Pankaj’s Capital 47,000        
Saurabh’s Capital 25,000 72,000    
    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 = 5 3
6 6
         
  = 5 3
  6
         
  = 2    
  6    

 

Saurabh’s Gaining Share = 1 1
6 6
         
  = 1 1
  6
         
  = 0    
  6    

Adjustment of Goodwill

Goodwill of the firm = Rs 42,000

Naresh’s Share of Goodwill = 42,000 X 2
6
         
  = Rs 14,000    

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

 

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2 Book 1 min - Question 36 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

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