Question 48 Chapter 5 of +2- Part-

Question 48 Chapter 5 of +2-Part-1

48. (Revaluation A/c/Partner‘s Cap A/c/B/S) L and M share the profits of a business in the Ratio 5:3. They admit N into partnership for ¼ share in the profits to be contributed equally by L and M. On the date of admission the balance sheet of the firm was as follows:

Liabilities RsAssetsRs
L’s Capital30,000Machinery26,000
M’s Capital20,000Furniture18,000
Workmen’s Compensation fund4,000Stock10,000
Bank Loan12,000Debtors8,000
Creditors2,000Bank6,000
 68,000 68,000

Terms of M’s admission were as follows:
(i) N will bring Rs. 25,000 as his capital.
(ii) Goodwill of the firm is to be valued at 4 years purchase of the average super-profits of last 3 years. Average profits of last 3 years were at Rs. 20,000, while the normal profits that can be earned with the capital employed are Rs. 12,000. No goodwill is to be raised in the books of the firm.
(iii) Furniture is to be appreciated by Rs. 6,000 and the value of a stock to be reduced by 20%
Prepare Revaluation Account, Partners Capital Accounts, and Balance Sheet of the new firm.

The solution of Question 48 Chapter 5 of +2 Part-1: – 

Revaluation Account
Particulars
AmountParticularsAmount
To Stock 2,000By Furniture 6,000
To profit on Revaluation     
– L 5/82,500    
– M 3/81,5002,870   
  6,000  6,000
Partners’ Capital Account
 
ParticularsLMNParticularsLMN
    By Balance b/d30,00020,000 
    By Revaluation A/c2,5001,500 
    By Bank A/c  25,000
    By N’s Current A/c4,0004,000 
To Balance c/d 36,50025,50025,000    
 36,50025,50025,000 36,50025,50025,000
Balance Sheet
Liabilities
AmountAssetsAmount
Workmen’s Compensation fund 4,000Machinery 26,000
Bank Loan 12,000Furniture 24,000
Creditors 2,000Stock 8,000
L’s Capital36,500 Debtors 8,000
M’s Capital25,500 N’s Current A/c 8,000
N’s Capital25,00087,000Bank(6000+25000) 31,000
  1,05,000  1,05,000

Working Notes:

Goodwill :

Goodwill  Rs
Average Profits=12,000
Normal Profits=20,000
Super Profits = (Average – Normal)Profits  
 =20,000 – 12,000
 =8,000
Goodwill=Super Profit X Years of Purchase
 =8,000 x 4
 =32,000
N’s Share of Goodwill =32,000X1
4
     
 =8,000  

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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

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

2 Book 1 min - Question 48 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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