Question 40 Chapter 6 - Unimax Class 12 Part 1 - 2021

Question 40 Chapter 6 – Unimax Class 12 Part 1 – 2021

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The solution of Question 40 Chapter 6 – Unimax Class 12 Part 1: –

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

40. The balance sheet of X, Y and Z who were sharing their profits in proportion to their capital stood as follows on 31st December 2021:

Liabilities	Amount	Assets		Amount
Sundry creditors	7,000	Cash at Bank		15,600
Capital accounts		Sundry Debtors	5,000
X	25,000	(-) Prov. For bad and d.d.	100	4,900
Y	20,000	Stock		10,000
Z	15,000	Plant and machinery		11,500
		Land and building		25,000

	67,000			67,000

Y retires and the following adjustments of the assets and liabilities have been agreed upon before the ascertainment of the amount payable by the firm to Y:

That the stock be depreciated by 5%.
A provision for d.d. be increased by 20%.
A provision of ₹ 750 be made in respect of outstanding legal charges.capital as base.
Goodwill for the entire firm be fixed at ₹16200 and Y’s share of the same be adjusted into the accounts of X and Z (No Goodwill account is to be raised).
X and Z decide to share the future profits of the firm in equal proportion.
The entire capital of New firm is fixed at ₹48000 between X and Z jn equal proportion. For the purpose, actual cash is to be brought in or paid off.
You are required to prepare the revaluation account, partners capital account, bank account, and the revised balance sheet after Y’s retirement. Also indicate the gaining ratio.

The solution of Question 40 Chapter 6 – Unimax Class 12 Part 1: –

Revaluation account

Particulars		Rs.	Particulars	Rs.
To stock a/c		500	By land and building a/c	5,000
To prov. For d.d a/c		150
To legal charges		750
To profit on rev.
X	1500
Y (5:4:3)	1200
Z	900	3600

		5,000		5,000

Partners Capital accounts

Particulars	X	Y	Z	Particulars	X	Y	Z
To Y’s capital a/c	1,350		4,050	By bal. b/d	25,000	20,000	15,000
To cash a/c	1,150	26,600		By profit on revaluation.	1,500	1,200	900
To bal. C/d	24,000		24,000	By X’s cap. a/c G.R.=1:3		1,350
				By Z’s capital a/c		4,060
				By cash a/c			12,150

	26,500	26,600	28,050		26,500	26,600	28,050

Balance sheet

Liabilities		Amount	Assets		Amount
Capital a/c			Cash (15600+12150-1150-26600)		Nil
X	24,000		S. Debtors	5,000
Z	24,000	48,000	(-)reserves	250	4,750
S. Creditors		7,000	Stock		9,500
Outs. Legal charges		750	Plant and machinery		11,500
			Land and building		30,000

		55,750			55,750

WORKING NOTE:

1) Calculations of gaining ratio:
Old ratio= 25000:20000:15000 =5:4:3
New ratio=1:1
X=1/2 – 5/12 =6/12 – 5/12 =1/12
Z=1/2 – 3/12 =6/12- 3/12 = 3/12
G.R. = 1:3.
2) Yes, share of Goodwill = Rs.16,200× 4/12 = Rs. 5,400.