Question 49 Chapter 5 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 49 Chapter 5 of +2- Part-

Question 49 Chapter 5 of +2-Part-1

Free Accounting book Solution - Class 11 and Class 12

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  Rs Assets Rs
Sundry Creditors 20,000 Cash 14,000
Capital A/c s   Debtors 18,000
Vimal 60,000 Plant & Machinery 50,000
Nirmal 32,000 Stock 40,000
Profit and losses A/c 10,000    
  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
Date Particulars
L.F. Debit Credit
           
  Revaluation A/c Dr.   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/c Dr.   12,000  
  Nirmal’s Capital A/c Dr.   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/c Dr.   60,000  
   To Kailash’s Capital A/c       40,000
   To Premium A/c       20,000
  (Being assets revalued )        
           
  Premium A/c Dr.   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
Amount Particulars Amount
To Balance b/d   14,000 By 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
Amount Particulars Amount
To Revaluation Account   12,000 By Balance b/d   60,000
To Balance c/d   62,000 By Profit & loss Account   6,000
      By Premium Account   8,000
    74,000     74,000
Nirmal capital Account
Particulars
Amount Particulars Amount
To Revaluation Account   8,000 By Balance b/d   32,000
To Balance c/d   40,000 By Profit & loss Account   4,000
      By Premium Account   12,000
    48,000     48,000
Kailash’s capital Account
Particulars
Amount Particulars Amount
To Balance c/d   40,000 By Bank Account   40,000
           
    40,000     40,000
Balance Sheet
Liabilities
Amount Assets Amount
Sundry Creditors   4,000 Cash   74,000
Capital A/c s   12,000 Debtors 18,000  
Vimal 60,000   Less provision
For debts
1,000 17,000
Nirmal 40,000   Stock (40000-4000)   36,000
Kailash 40,000 1,40,000 Plant & Machinery (50000
-15000)
  35,000
    1,62,000     1,62,000

Working Notes:

Calculation of sacrifice Ratio :

Vimal’s sacrifice Ratio = 3 2
5 4
         
  = 2    
  20    
Nirmal’s sacrifice Ratio = 2 1
5 4
         
  = 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

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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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