# Question 42 Chapter 5 – Unimax Class 12 Part 1 – 2021

Question 42 Chapter 5 – Unimax Class 12 Part 1 – 2021

42. M and N are partners in a firm sharing profits and losses in the ratio of 5 : 3. On 31st December, 2020 their Balance Sheet was as under :

 Liabilities Amount Assets Amount Sundry Creditors 4,000 Machinery 12,000 Bills Payable 2,000 Stock 8,000 Capital Sundry Debtors 7,200 M 12,000 Bank Balance 500 N 10,000 Cash in Hand 300 28,000 28,000

On the above date the partners decided to admit R as a partner on the following terms :
The new profit sharing ratio among M, N and R will be 7 : 5 : 4 respectively.
R will bring Rs. 8000 as his capital and Rs. 4000 for his share of goodwill.
M and N will withdraw half of the goodwill in cash.
Machinery is to be valued at Rs. 15000 ; stock at Rs. 10000 and Provision for bad debts of Rs. 1000 is to be created.
There is a liability of Rs. 2000 being the outstanding salary payable to employees of the firm.
This liability is not included in the creditors.
Partners decide to show this liability in the books of accounts of the new firm. Prepare Revaluation Account, partners’ capital accounts and the Balance Sheet.

## The solution of Question 42 Chapter 5 – Unimax Class 12 Part 1

Revaluation A/c

 Particulars Rs. Particulars Rs. To Provision for bad debts 1000 By Machinery A/c 3000 To Outstanding Salary A/c 2000 By Stock A/c 2000 To Profit on revaluation a/c M (2000 X 5/8) 1250 N (2000 X 3/8) ( 5 : 3) 750 2000 5000 5000

Capital Accounts

 Particulars M N R Particulars M N R To Cash A/c 1500 500 – By Balance b/d ( capital introduced 12000 10000 – To Balance b/d 14750 11250 8000 By Cash A/c – – 8000 By Premium A/c 3000 1000 – By Profit on Revaluation a/c 1250 750 – 16250 11750 8000 16250 11750 8000

Balance Sheet

 Particulars Rs. Particulars Rs. Sundry Creditors 4000 Machinery 15000 Bills Payable 2000 Stock 10000 To out salary 2000 Sundry debtors 6200 Capital Accounts Bank Balance 500 M : 14750 Cash 10300 N : 11250 R : 8000 34000 42000 42000

Working Note
Old Share – New share
M’s sacrifice = Old share – new share
= 5/8 -7/16
= 3/16
N’s sacrifice = 3/8 -5/16
= 1/16
S.R. = 3 : 1 = Rs. 4000
A : B = 3000 : 1000

What is Partnership – Meaning and its Types

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)