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Question 37 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 37 Chapter 6 of +2-A
Question 37 Chapter 6 of +2-A

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Question 37 Chapter 6 of +2-A

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37. X, Y, and Z are partners sharing profits in the ratio of 4: 3: 2. Their Balance Sheet as of 31st March 2019 stood as follows:

LiabilitiesAmountAssets Amount
Creditors 24,140Cash at Bank  3,300
   Sundry Debtors  3,045 
Capital A/cs:  Less: Provision for Doubtful Debts  1052,940
X’s Capital 12,000 Stock  4,800
Y’s Capital9,000 Plant and Machinery 5,100
Z’s Capital 6,00027,000Land and Building 15,000
   Y’s Loan 20,000
  51,140  51,140

AY retired on 1st April 2019 after giving due notice. The following adjustments in the books of the firm were agreed:

  1. Land and Building be appreciated by 10%.
  2. Provision for Doubtful Debts is no longer necessary since all the debtors are good.
  3. Stock be appreciated by 20%.
  4. Adjustment is made in the accounts to rectify a mistake previously committed whereby Y was credited in excess by 810, while X and Z were debited in excess of 420 and 390 respectively.
  5. Goodwill of the firm is valued at 5,400 and Y’s share of the same be adjusted to that of X and Z who was going to share in the ratio of 2:1.
  6. It was decided by X and Y to settle Y’s account immediately on his retirement.

Prepare: i) Revaluation Account; ii) Partner’s Capital Accounts and iii) Balance Sheet of the firm after Y’s retirement.

The solution of Question 37 Chapter 6 of +2-A: –

Revaluation Account
Particular
AmountParticularAmount
  By Land and Building A/c1,500
  (15,000 × 10%) 
  By Prov. for Doubtful Debts A/c105
  By Stock A/c960
To Profit transferred to (4,800 × 20%)  
X’s Capital A/c1,140    
Y’s Capital A/c855    
Z’s Capital A/c57018,000   
  2,565  2,565

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Partners’ Capital Account
Part.XY Z

Part.

XY Z
To Y’s Capital A/c(Goodwill)1,200600By Balance B/d12,0009,0006,000
To X’s Capital A/c420By Revaluation A/c1,140855570
To Z’s Capital A/c390By X’s Capital A/c1,200
To Y’s Loan A/c10,845By Z’s Capital A/c600
To Balance c/d 12,3606,360By Y’s Capital A/c420390
 13,56011,6556,960 13,56011,6556,960

 

Balance Sheet
Liabilities
AmountAssetsAmount
Sundry Creditors24,140Cash at Bank 3,300
  Sundry debtors3,045
  Stock5,760
  Plant and Machinery5,100
  Land and Building16,500
   Y’s Loan 9,155
Capital:     
X’s Capital12,360    
Z’s Capital6,36018,720  
  42,860  42,860

 

Working Note:-

Calculation of Gaining Ratio

Old Ratio of X, Y, and Z = 4:3:2
Y retires from the firm.

Gaining Ratio of X and Z = 2:1 (Given)

Adjustment of Goodwill

Goodwill of the firm = Rs 5,400

Y’s Share of Goodwill=5,400X3
9
     
 =Rs 1,800  

 

X’s Share of Goodwill=1,800X2
3
     
 =Rs 1,200  

 

Z’s Share of Goodwill=1,800X1
3
     
 =Rs 600  

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Computation of final settlement amount payable to/ receivable from Y after his retirement:

Existing Loan against Y = 20,000

Capital Account Balance Payable = 10,845

The amount payable to/receivable from Y

=Existing Loan against YCapital Account Balance Payable
 =20,00010,845
 =9,155/-  

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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