Question 49 Chapter 5 of +2- Part-

Question 49 Chapter 5 of +2-Part-1

49. (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 a 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
Sundry Creditors20,000Cash14,000
Capital A/c s Debtors18,000
Vimal60,000Plant & Machinery50,000
Nirmal32,000Stock40,000
Profit and losses A/c10,000  
 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. 40,000 as his capital and pay Rs. 20,000 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. 35,000 and bad and doubtful debts. Stock by 10%. Provision of Rs. 1,000 to be created for bad and doubtful debts
(iv) Goodwill account is not to be raised.
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 49 Chapter 5 of +2 Part-1: – 

Journal
DateParticulars
L.F.DebitCredit
2019     
 Revaluation A/cDr. 20,000 
 To Plant & Machinery A/c.  15,000
 To Stock A/c(10% of 140,000)   4,000
 To Provisional for doubtful debts A/c)   1,000
 (Being the decrease in the value of various assets on Kailash’s Admission )   
     
 Vimal’s Capital A/cDr. 12,000 
 Nirmal’s Capital A/cDr. 8,000 
 To Revaluation A/c   20,000
 (Being loss on the revaluation transferred to Capital’s of old partners in old ratio)    
      
 Cash A/cDr. 60,000 
  To Kailash’s Capital A/c   40,000
  To Premium A/c   20,000
 (Being assets revalued )    
      
 Premium A/cDr. 20,000 
 To Vimal’s Capital A/c   8,000
 To Nirmal’s Capital A/c   12,000
 (Being amount of goodwill brought in by Kailash shared by old partners in old ratio)    
     
Cash Account
Particulars
AmountParticularsAmount
To Balance b/d 14,000By Balance b/d 74,000
To Kailash’s Capital A/C 40,000   
To Goodwill A/c 20,000   
  74,000  74,000
Vimal’s capital Account
Particulars
AmountParticularsAmount
To Revaluation Account 12,000By Balance b/d 60,000
To Balance c/d 62,000By Profit & loss Account 6,000
   By Premium Account 8,000
  74,000  74,000
Nirmal capital Account
Particulars
AmountParticularsAmount
To Revaluation Account 8,000By Balance b/d 32,000
To Balance c/d 40,000By Profit & loss Account 4,000
   By Premium Account 12,000
  48,000  48,000
Kailash’s capital Account
Particulars
AmountParticularsAmount
To Balance c/d 40,000By Bank Account 40,000
      
  40,000  40,000
Balance Sheet
Liabilities
AmountAssetsAmount
Sundry Creditors 4,000Cash 74,000
Capital A/c s 12,000Debtors18,000 
Vimal60,000 Less provision
For debts
1,00017,000
Nirmal40,000 Stock (40000-4000) 36,000
Kailash40,0001,40,000Plant & Machinery (50000
-15000)
 35,000
  1,62,000  1,62,000

Working Notes:

Calculation of sacrifice Ratio :

Vimal’s sacrifice Ratio=32
54
     
 =2  
 20  
Nirmal’s sacrifice Ratio=21
54
     
 =3  
 20  

Sacrifice made by Vimal & Nirmal at the admission of Kailash is in the ratio of 2:3

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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 49 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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