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

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

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

Free Accounting book Solution - Class 11 and Class 12

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)

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)

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

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