Question 43 Chapter 5 - Unimax Class 12 Part 1 - 2021

Question 43 Chapter 5 – Unimax Class 12 Part 1 – 2021

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The solution of Question 43 Chapter 5 – Unimax Class 12 Part 1

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

43. A and B are partners sharing profits in the ratio of 2 : 3. On 1st January, 2021 they admitted C into partnership. C agreed to contribute Rs. 50000 as hi capital. A, B and C agree to share profits and losses in the ratio of 2 : 3 : 3 respectively. The balance Sheet of A and B as on 31st December, 2020 was as under :

Liabilities	Amount	Assets	Amount
Sundry Creditors	50,000	Cash at Bank	6250
Capital Accounts		Stock in Hand	50,000
A	62500	Sundry Debtors	31250
B	37500	Plant	25000
		Premises	37500
	1,50,000		1,50,000

They agreed to revalue the assets as under :
Stock on hand Rs. 45000 ; Plant Rs. 18000 ; Premises Rs. 50000 ; a provision of 5% for doubtful debts is to be made. C agrees to transfer to Rs. 15000 to A’s and B’s capital accounts for goodwill from his capital account in 2 : 3.
Pass necessary journal entries, prepare revaluation A/c, capital accounts of A, B and C and a revised Balance Sheet.

The solution of Question 43 Chapter 5 – Unimax Class 12 Part 1

Particulars	Rs.	Particulars		Rs.
To Stock A/c	5000	By Premises A/c		12500
To Plant A/c	7000	By Loss on Revaluation A/c
To Provision on doubtful debts A/c		A ( 2/5 X 1063)	425
(5/100 X 31250)	1563	B ( 3/5 X 1063) ( 2 : 3 )	638	1063

	13563			13563

Capital Accounts

Particulars	M	N	R	Particulars	M	N	R
To Loss on revaluation A/c	425	638	_	By Balance b/d	62500	37500	_
To A’s Capital A/c	_	_	6000	By Bank A/c	_	_	50000
To B’s Capital A/c	_	_	9000	By C’s Capital A/c	6000	9000	_
To Balance b/d	68075	45862	35000


	68500	46500	50000		68500	46500	50000

Balance Sheet

Particulars		Rs.	Particulars		Rs.
Sundry Creditors		50000	Plant		18000
Capital Accounts			Premises		50000
A :	68075		Cash at Bank		56250
B :	45862		Stock in hand		45000
C :	35000	148937	Debtors	31250
			Less Provision for sacrifice debts	1563	29687

		198937			198937

Journal

Date	Particulars		L.F.	Debit	Credit
	Revaluation a/c	Dr.		13563
	To Stock a/c				5000
	To Plant a/c				7000
	To Provision for bad debts a/c				1563
	(Being decrease in the value of assets)
	Premises a/c	Dr.		12500
	To Revaluation A/c				12500
	(Being increase in the value of asset)
	A’s Capital a/c	Dr.		425
	B’s Capital a/c	Dr.		638
	To Revaluation A/c				1063
	(Being net loss on revaluation transferred to old partners capital a/c in old ratio)
	Bank a/c			50000
	To C’s capital a/c				50000
	(Being capital introduced by new partners in cash)

Date	Particulars		L.F.	Debit	Credit
	C’s capital a/c	Dr.		15000
	To A’s Capital A/c				6000
	To B’s Capital A/c				9000
	(Being amount transferred from C’s capital a/c to A and B’s capital a/c on account of goodwill)

Working Note
Old Share – New share
A’s sacrifice = Old share – new share
= 2/5 – 2/8
= 6/40
B’s sacrifice = 3/5 – 3/8
= 9/40
S.R. = 6 : 9 = 2 : 3
M and N will share goodwill = 2 : 3 = 6000 : 9000