Question 39 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 39 Chapter 6 of +2-A

Question 39 Chapter 6 of +2-A

39. Following is the Balance Sheet of X, Y, and Z as of 31st March 2019. They shared profits in the ratio of 3 : 3 : 2:

Liabilities Amount Assets  Amount
Sundry Creditors  2,50,000 Cash at Bank  50,000
General Reserve  80,000 Bills Receivable  60,000
Partners’ Loan A/cs:   Sundry Debtors  80,000  
X’s Loan    50,000 Less: Provision for Doubtful Debts 4,000 76,000
Y’s Loan   40,000 Stock    1,24,000
Capital A/cs:    Fixed Assets 3,00,000
X’s Capital  1,00,000   Advertisement Suspense A/c  16,000
Y’s Capital 60,000   Profit and Loss A/c  4,000
Z’s Capital  50,000 2,10,000      
    6,30,000     6,30,000

On 1st April 2019, Y decided to retire from the firm on the following terms:

  1. Stock to be reduced by 12,000.
  2. Advertisement Suspense Account to be written off.
  3. Provision for Doubtful Debts to be increased to 6,000.
  4. Fixed Assets be appreciated by 10%.
  5. Goodwill of the firm, valued at 80,000, and the amount due to the retiring partners be adjusted in X’s and Z’s Capital Accounts.

Prepare Revaluation Account, Partners’ Capital Accounts, and the Balance Sheet to give effect to the above.

The solution of Question 39 Chapter 6 of +2-A: –

Revaluation Account
Particular
Amount Particular Amount
To Stock A/c 12000  By Fixed Assets A/c 30,000
To Prov. for Doubtful Debts 2000 (3,00,000 × 10%)  
(6,000 – 4,000)      
To Profit transferred to      
X’s Capital A/c 6000        
Y’s Capital A/c 6000        
Z’s Capital A/c 4000 16000      
    30000     30000

 

Partners’ Capital Account
Part. X Y Z

Part.

X Y Z
To Profit and Loss A/c 1500 1500 1000 By Balance B/d 1,00,000 60,000 50,000
To Advertise Suspense A/c 6000 6000 4000 By General Reserve A/c 30,000 30,000 20000
To Y’s Capital A/c 18000 12000 By Revaluation A/c 6000 6000 4000
To Y’s Loan A/c   1,58,500   By X’s Capital A/c 18000
To Balance c/d 1,10,500

57,000

By Z’s Capital A/c 12000
  1,36,000 1,26,000 74,000   1,36,000 1,26,000 74,000

Note: – General Reserve A/c, Profit and Loss A/c, and Advertise Suspense A/c all are distributed in the old ratio.

Balance Sheet
Liabilities
Amount Assets Amount
Sundry Creditors 2,50,000 Cash at Bank   50000
X’s Loan 50,000 Bills Receivable 60000
Y’s Loan 1,58,500 Debtors 80,000  
    Less: Prov. For D/D 6,000 74,000
    Stock 1,12,000
Capital A/cs   (1,24,000 – 12,000)  
X’s Capital 1,10,500   Fixed Assets   3,30,000
Z’s Capital 57,000 1,67,500 (3,00,000 + 30,000)  
    6,26,000     6,26,000

 

Y’s Loan Account
Liabilities
Amount Assets Amount
    By Balance b/d    40000
    Y’s Capital A/c 1,18,500
To Balance c/d   1,58,500    
    1,58,500     1,58,500

Working Note:-

Calculation of Gaining Ratio

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

Gaining Ratio of X and Z = 3:2 (Given)

Adjustment of Goodwill

Goodwill of the firm = Rs 80,000

Y’s Share of Goodwill = Firm’s Goodwill X B’s share
         
  = 80,000 X 3
8
         
  = Rs 30,000    

 

X’s Share of Goodwill = Y’s Goodwill X Gaining share of X
         
  = 30,000 X 3
5
         
  = Rs 18,000    

 

Z’s Share of Goodwill = Y’s Goodwill X Gaining share of Z
         
  = 30,000 X 2
5
         
  = Rs 12,000    

 

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 - Question 39 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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