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Question 37 Chapter 3 of Class 12 Part – 1 VK Publication

Question 37 Chapter 3 of Class 12 Part - 1 VK Publication
Question 37 Chapter 3 of Class 12 Part - 1 VK Publication

Question 37 Chapter 3 of Class 12 Part – 1

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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

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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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