Question 41 Chapter 5 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 41 Chapter 5 of +2- Part-

Question 41 Chapter 5 of +2-Part-1

Free Accounting book Solution - Class 11 and Class 12

41. (Goodwill withdraw by Old Partner) The Balance sheet of A and B who are partners in a firm sharing profits and losses in the ratio 2:1 is as under :

Liabilities   Rs Assets Rs
Bills Payable   5,000 Cash 200
Creditors   60,900 Bank 1,000
Capitals     Sundry debtors 9,700
A 30,000   Stock 20,000
B 20,000 50,000 Plant 5,000
      Machinery 30,000
      Building 50,000
    1,15,900   1,15,900

They decided to admit C on the following terms :

  1. C will receive size 1/3 share in the future profits and will contribute Rs. 15,000 as capital and Rs. 6,000 as goodwill.
  2. Stock, plant, and machinery are to be depreciated by 10%.
  3. A reserve for doubtful debts at %% be created on the sundry debtors.
  4. The value of buildings is increased by 20%.
  5. The old partners have withdrawn the amounts received as goodwill from C.
    Prepare Re-valuation Account(profit and loss adjustment account ). Partners capital accounts and the balance sheet of the new firm.

The solution of Question 41 Chapter 5 of +2 Part-1: – 

Revaluation Account
Particular
Amount Particular Amount
To Stock   2,000 By Buildings   10,000
To Plant   500      
To Machinery   3,000      
To Provision for doubtful debts   485      
To Profit on revaluation transferred to Capital accounts          
– A  2,677        
– B  1,388 4,065      
    10,000     10,000
A’s capital accounts
Particular
Amount Particular Amount
To Bank Account   2,000 By Balance b/d   30,000
      By Premium Account   4,000
      By Revaluation Account   2,667
To Balance c/d   32,677      
    36,677     36,677
B’s capital accounts
Particular
Amount Particular Amount
To Bank Account   2,000 By Balance b/d   20,000
      By Premium Account   2,000
      By Revaluation Account   1,338
To Balance c/d   23,338      
    23,338     23,338
C’s capital accounts
Particular
Amount Particular Amount
      By Balance b/d   15,000
To Balance c/d   15,000      
    23,338     23,338
Bank accounts
Particular
Amount Particular Amount
To Balance b/d   1,000 By A’s Capital Account   20,000
To C’s Capital Account   15,000 By B’s Capital Account   2,000
To Premium Account   6,000      
      By Balance c/d   16,000
    22,000     22,000
Premium accounts
Particular
Amount Particular Amount
To A’s Capital Account   4,000 By Bank Account   6,000
To B’s Capital Account   2,000      
           
    6,000     6,000
Balance Sheet
Liabilities
Amount Assets Amount
Bills Payable   5,000 Cash   200
Creditors   60,900 Bank   16,000
Capital     Sundry debtors 9,700  
A 32,677   Less provision for
Doubtful debts
485 9,215
B 21,338   Stock   18,000
C 15,000 69,015 Plant   4,500
      Machinery   27,000
      Building   60,000
    1,34,915     1,34,915

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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

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2 Book 1 min - Question 41 Chapter 5 of +2 Part-1 - USHA Publication 12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firm

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