Question 47 Chapter 5 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 47 Chapter 5 of +2- Part-

Question 47 Chapter 5 of +2-Part-1

Free Accounting book Solution - Class 11 and Class 12

47. ( Necessary Adjusting Entries) The Balance sheet of Ram and Shyam who share profits in proportion to capital as at 31st March 2019 is as follows:

Liabilities    Rs Assets Rs
Creditors   19,000 Freehold Premises 20,000
Bills payable   16,000 Plant & Machinery 13,500
Capital accounts      Furniture & Fittings 1,750
Ram 30,000   Motor lorries 1,350
Shyam 25,000 55,000 Stock 14,100
Current accounts      Bills Receivables 10,800
Ram 2000   Debtors 27,500
Shyam 1,800 3,800 Bank 1,590
      Cash  3,210
    93,800   93,800

On 1st April 2019. They admitted Arjun into partnership on the following terms:
(a) Arjun to bring in Rs. 20,000 as capital and Rs. 6,600 for goodwill. He is to receive one-fourth share of the profits.
(b) Reserve is to be raised equal to 2 percent on debtors as provision for probable bad debts
(c) Value of stock to be written down by 5 percent.
(d) Freehold premises are to be valued at Rs. 22,406; plant and machinery Rs. 11,800: Fixture and Fittings Rs. 1,540 and Motor lorries Rs. 800.
You are required to make the necessary adjusting tries in the firm. Also, give the Balance Sheet of the new firm and give the proportions in which the partners will share profits, the proportions of Ram and Shyam being as formerly.

The solution of Question 47 Chapter 5 of +2 Part-1: – 

Journal
Date Particulars
L.F. Debit Credit
           
1 Bank A/c Dr.   26,600  
  To Arjun’s Capital A/c .     20,000
  To Premium A/c       6,600
  (Being cash brought in by new partner as his capital & goodwill )      
         
2 Premium A/c Dr.   6,600  
  To Ram’s Capital A/c       3,600
  To Shyam’s Capital A/c       3,000
  (Being goodwill distributed in Sacrificing Ratio 6:5) )        
           
3 Revaluation A/c Dr.   3,715  
  To provisional for doubtful debts A/c(2% of 27,5000)       550
  To Stock A/c(5% of 14,100) (Decrease)       750
  To Plant & Machinery A/c (13500-11800)(Decrease)       1,700
  To Furniture & Fittings A/c (1750-1540)(Decrease)       210
  To Motor lorries A/c (1350-800)       550
  (Being assets revalued )        
           
4 Freehold Premises A/c Dr.   2,406  
  To Revaluation A/c       2,406
  (Being revaluation of assets)        
           
5 Ram’s Current A/c Dr.   714  
  Shyam’s Current A/c Dr.   595  
  To Revaluation A/c       1,309
  (Being loss on revaluation distributed)        
         
Partners’ Capital Account
Particulars Ram Shyam Particulars Ram Shyam
To Revaluation A/c (loss) 714 595 By Balance b/d 2,000 1,800
      By Premium Account 3,600 3,000
To Balance c/d 4,886 4,205      
  5,600 4,800   5,600 4,800
Balance Sheet
Liabilities
Amount Assets Amount
Sundry Creditors   19,000 Freehold Premises   22,406
Bills Payable   16,000 Plant and machinery   11,800
Capital accounts     Furniture & Fittings   1,540
Ram 30,000   Motor lorries   800
Shyam 25,000   Stock   13,395
Arjun 20,000 75,000 Bills Receivables   10,800
      Debtors 27,500  
Current accounts     Less provision 550 26,950
Ram   4,886 Cash   3,210
Shyam   4,205 Bank (1590+26600)   28,190
    1,19,091     1,19,091

Working Notes:
NET PROFIT SHARING RATIO

Old Ratio of Ram & Shyam = 6:5
Let Total profit of the firm be Rs. 1

New Partner C’s share = = 1
4
Joint Share of Ram & Shyam  = 1 1
4
         
  = 3    
  4    
Ram’s New Share = 6 x 3
11 4
         
  = 18    
  44    
Shyam’s New Share = 5 x 3
11 4
         
  = 15    
  44    
Arjun’s Share = 15
44

NEW PROFIT SHARING RATIO = 18 : 15 : 11

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Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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2 Book 1 min - Question 47 Chapter 5 of +2 Part-1 - USHA Publication 12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firm

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