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Question 45 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 45 Chapter 6 of +2-A
Question 45 Chapter 6 of +2-A

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Question 45 Chapter 6 of +2-A

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45. Amit, Balan, and Chander were partners in a firm sharing profits in the proportion of 1/2, 1/3, and 1/6 respectively. Chander retired on 1st April 2014. The Balance Sheet of the firm on the date of Chander’s retirement was as follows

LiabilitiesAmountAssets Amount
Sundry Creditors 12,600Bank  50,000
Provident Fund3,000Debtors30,000 
General Reserve 9,000Less: Provision 1,00029,000
Partner’s Capital A/cs: Stock  25,000
Amit’s Capital 40,000 Investments10,000
Balan’s Capital36,500 Patents 5,000
Chander’s Capital 20,00096,500Machinery48,000
  1,21,100  1,21,100

It was agreed that:

  1. Goodwill will be valued at 27,000.
  2. Depreciation of 10% was to be provided on Machinery.
  3. Patents were to be reduced by 20%.
  4. Liability on account of Provident Fund was estimated at 2,400.
  5. Chander took over Investments for 15,800.
  6. Amit and Balan decided to adjust their capitals in a proportion to their profit-sharing ratio by opening Current Accounts.

Prepare Revaluation Account and Partners’ Capital Accounts on Chander’s retirement.

The solution of Question 45 Chapter 6 of +2-A: –

Revaluation Account
Particular
AmountParticularAmount
To Machinery A/c4,800By Investments A/c5,800
To Patents1,000By Provident Fund A/c600
    
To Profit transferred to:   
Amit’s Capital A/c300    
Balan’s Capital A/c200    
Chander’s Capital A/c100600   
  6,400  6,400

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Partners’ Capital Account
Part.AmitBalanChander

Part.

AmitBalanChander
To Investments A/c15,800By Balance B/d40,00036,50020,000
To Chander’s Capital A/c2,7001,800By Revaluation (Profit)A/c300200100
To Chander’s Loan A/c10,300By General Reserve A/c4,5003,0001,500
To Balan’s Current A/c5,900By Amit’s Capital A/c2,700
    By Balan’s Capital A/c1,800
    By Current A/c5,900
        
        
        
 50,70039,70026,100 50,70039,70026,100

 

Working Note:-

Calculation of Gaining Ratio

Old Ratio of Amit, Balan, and Chander = 1/2: 1/3: 1/6

= 3/6:2/6:1/6       (make base equal)
Chander retires from the firm.

New or Gaining Ratio of Amit and Balan,= 3:2 (as per old ratio)

Adjustment of Goodwill

Goodwill of the firm = Rs 27,000

Chander’s Share of Goodwill=Firm’s GoodwillXChander’s share
     
 =27,000X1
6
     
 =Rs 4,500  

 

Amit will pay=Chander’s GoodwillX

Share of Amit

     
 =4,500X3
5
     
 =Rs 2,700  

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Balan will pay=Chander’s GoodwillXShare of Balan
     
 =4,500X2
5
     
 =Rs 1,800  

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Calculation of Addition/withdrawal of Capital by the Amit and Balan

Balance of Capital Amount after all adjustments=Opening Balance of Capital Account+All Credits All Debits

 

Balance of Amit’s Capital Amount after all adjustments=40,000+300+4,5002,700
 =42,100/-      

 

Balance of Balan’s Capital Amount after all adjustments=36,500+200+ 3,000(1,800)
         
 =37,900      

 

Total Capital of the firm=Amit’s Capital Balance+Balan’s Capital Balance
     
 =42,100+37,900
     
 =80,000  

 

Calculation of Total Capital

The total capital of the Firm= Rs 80,000

Amit’s New Capital=Firm’s new CapitalX

Share of Amit

     
 =80,000X3
5
     
 =Rs 48,000  

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Balan New Capital=Firm’s new CapitalXShare of Balan
     
 =80,000X2
 5
     
 =Rs 32,000  

 

Calculation of Addition/withdrawal of Capital by the Amit and Balan

Addition/withdrawal by Amit’s in/from Capital A/c

=New Capital AmountBalance of Capital Amount after all adjustments
     
 =48,00042,100
     
 =5,900/-  

 

Addition/withdrawal by Balan’s in/from Capital A/c=New Capital AmountBalance of Capital Amount after all adjustments
     
 =32,00037,900
     
 =5,900/-  

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

  • Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
  • Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
  • Chapter No. 3 – Goodwill: Nature and Valuation
  • Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
  • Chapter No. 5 – Admission of a Partner
  • Chapter No. 6 – Retirement/Death of a Partner
  • Chapter No. 7 – Dissolution of a Partnership Firm

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)

  • Chapter No. 1 – Financial Statements of a Company
  • Chapter No. 2 – Financial Statement Analysis 
  • Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
  • Chapter No. 4 – Accounting Ratios
  • Chapter No. 5 – Cash Flow Statement

 

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

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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