Question 45 Chapter 5 – Unimax Class 12 Part 1 – 2021

Question 45 Chapter 5 - Unimax Class 12 Part 1 - 2021

Question 45 Chapter 5 – Unimax Class 12 Part 1 – 2021

Free Accounting book Solution - Class 11 and Class 12

45. Vimal and Nirmal are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st December, 2021 the position of the business was as follows :

Liabilities Amount Assets Amount
Sundry Creditors 20,000 Cash 14000
Profit and Loss Account 10,000 Debtors 18,000
Capital Accounts   Plant and Machinery 50000
Vimal 60000 Stock 40000
Nirmal 32000    
  1,22,000   1,22,000

On this day, Kailash agrees to join the business on the following terms and conditions :

(i)He will introduce Rs. 40000 as his capital and will pay Rs. 20000 to the existing partners for his share of goodwill.

(ii)The new profit sharing ratio is 2 : 1 : 1 respectively for Vimal, Nirmal and Kailash.

(iii)A revaluation of assets will be made by reducing plant and machinery to Rs. 35000 and stock by 10%. Provision of Rs. 1000 to be created for bad and doubtful debts.
Pass journal entries for the above arrangement and give the Balance Sheet of the newly constituted firm. Also specify the sacrifice ratio.

The solution of Question 45 Chapter 5 – Unimax Class 12 Part 1

Journal

Date Particulars   L.F. Debit Credit
  Revaluation a/c Dr.   20000  
      To Plant and Machinery a/c       15000
      To Stock A/c       4000
      To Provision for bad debts a/c       1000
  (Being value of assets decreased)        
  Vimal’s Capital a/c Dr.   12000  
  Nirmal’s Capital a/c Dr.   8000  
      To Revaluation A/c       20000
  (Being net loss transferred to old partners capital a/c in old ratio)        
  Cash a/c Dr.   60000  
      To Kailash’s capital a/c       40000
      To Premium A/c       20000
  (Being capital and goodwill brought in cash by new partner)        
  Premium a/c Dr.   20000  
      To Vimal’s capital a/c       8000
      To Nirmal’s capital a/c       12000
  (Being goodwill credited to old partner’s capital A/c in sacrificing ratio)        

 

Date Particulars   L.F. Debit Credit
  Profit and Loss a/c Dr.   10000  
      To Vimal’s Capital A/c       6000
      To Nirmal’s Capital A/c       4000
  (Being Profits of the business credited to old partners’s capital a/c in old ratio)        

  Revaluation A/c

Particulars Rs. Particulars   Rs.
To Stock A/c 4000 By Loss on Revaluation A/c    
To Plant and Machinery A/c 15000 Vimal ( 3 : 2 ) 12000  
To Provision on doubtful debts A/c 1000 Nirmal 8000 20000
         
         
  20000     20000

  Capital Accounts    

Particulars Vimal
Nirmal
Kailash
Particulars Vimal
Nirmal
   Kailash
To Loss on revaluation A/c 12000 8000 By Balance b/d 60000 32000
To Balance c/d 62000 40000 40000 By Cash A/c 40000
        By Premium A/c 8000 12000
        By Profit and Loss A/c ( 3 : 2) 6000 4000
               
               
  74000 48000 40000   74000 48000 40000

  Balance Sheet

Particulars   Rs. Particulars   Rs.
Sundry Creditors   2000 Cash   74000
Capital Accounts     Stock   36000
Vimal 62000   Plant and Machinery   35000
Nirmal 4000   Debtors 18000  
Kailash 40000 142000 Less Provision for sacrifice debts 1000 17000
           
    162000     162000

Working Note
Old Share – New share
Vimal’s sacrifice = Old share – new share
                         = 3/5 – 2/4
                         = 2/20
Nirmal’s sacrifice = 2/5 – 1/4
                            = 3/20
S.R. = 2 : 3

 

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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