Question 37 Chapter 3 of Class 12 Part – 1
37. P, Qand Rare in partnership sharing profits and losses in the ratio of 5:4:3. On 31st March, 2018, their Balance Sheet was as follows:
Liabilities | Rs. | Assets | Rs. |
Sundry Creditors | 50,000 | Cash at bank | 40,000 |
Outstanding Expenses | 5,000 | Sundry Debtors | 2,10,000 |
General Reserve | 75,000 | Stock | 3,00,000 |
Capital Accounts: | Furniture | 60,000 | |
P 4,00,000 | Plant and Machinery | 4,20,000 | |
Q 3,00,000 | |||
R 2,00,000 | 9,00,000 | ||
10,30,000 | 10,30,000 |
It was decided that with effect from 1st April, 2018 the profit-sharing ratio will be 4:3:2. For this purpose, the following revaluations were made:
(i) Furniture to be taken at 80% of its value.
(ii) Stock to be appreciated by 20%.
(iii) Plant and Machinery be valued at Rs. 4,00,000.
(iv) Create provision for doubtful debts for Rs. 10,000 on debtors.
(v) Outstanding expenses to be increased by Rs.3,000.
Partners agreed that altered values are not to be recorded in the books and they also do not want to distribute the general reserve.
You are required to pass a single Journal entry to give effect to the above. Also prepare the revised Balance Sheet of the firm.
The solution of Question 37 Chapter 3 of Class 12 Part – 1: –
Journal Entry
Date |
Particulars |
L . F | Dr. ₹ | Cr. ₹ | |
2018 | P’s Capital A/c | Dr. | 2,500 | ||
April 1 | To R’s Capital A/c | 2,500 | |||
( Being proportionate share of General Reserve and profit on revaluation adjusted between partners) |
Balance Sheet
(as at 1st April 2018)
Liabilities |
Amount |
Assets | Amount | |
Creditors | 50,000 | Cash At Bank | 40,000 | |
Outstanding Expenses | 5,000 | Sundry Debtors | 2,10,000 | |
General Reserve | 75,000 | Stock | 3,00,000 | |
Capitals A/c’s: | Furniture | 60,000 | ||
P | 3,97,500 | Plant and Machinery | 4,20,000 | |
Q | 3,00,000 | |||
R | 2,02,500 | 9,00,000 | ||
10,30,000 | 10,30,000 |
Working Note:
1. Statement Showing Profit on Revaluation and General Reserve
Particulars | Amount | Amount |
Loss due to decrease in the value of furniture | 12,000 | |
Loss due to decrease in the value of plant and machinery | 20,000 | |
Loss due to Provision for doubtful Debts | 10,000 | |
Loss due to increase in Outstanding Expenses | 3,000 | (45,000) |
Profit due to increase in the value of stock | 60,000 | 60,000 |
Profit on revaluation | 15,000 | |
Add: General Reserve | 75,000 | |
90,000 |
2.Partner Capital Account
Particulars | A | B |
C |
Particulas | A | B | C |
To R’s Capital A/c | 2,500 | – | – | By Balance b/d | 4,00,000 | 3,00,000 | 2,00,000 |
To Balance c/d | 3,97,500 | 3,00,000 | 2,02,500 | By R’s Capital A/c | – | – | 2,500 |
4,00,000 | 3,00,000 | 2,02,500 | 4,00,000 | 3,00,000 | 2,02,500 |
3. Old Ratio of P,Q and R = 5:4:3
New Ratio of P,Q and R = 4:3:2
Sacrificing ratio = old share – new share
P = 5/12-4/9=(15-16)/36=(-1)/36 (Gain)
Q = 4/12-3/9=(12-12)/36=0/36 (Nil)
R = 3/12-2/9=(9-8)/36=1/36 (Sacrifice)
Amount to be adjusted = 90,000 x 1/36= Rs. 2,500
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Also, Check out the solved question of previous Chapters: –
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
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