# Question 50 Chapter 5 of +2 Part-1 – USHA Publication 12 Class Part – 1

Q-50. - CH-2 - Usha +2 Book 2018 - Solution

Question 50 Chapter 5 of +2-Part-1

50. (Provision for a discount on Creditors ) the balance sheet of X& Y who are partners sharing profits in a ratio of 3:2 on 31st march,2019 is as under :

 Liabilities Rs Assets Rs Creditors 6,200 Cash 2,000 Bills Payable 3,300 Stock 7,700 General Reserve 5,000 Debtors 8,800 Capital Account Plant & Machinery 18,000 X 16,800 Investments 3,000 Y 13,200 30,000 Goodwill 5,000 44,500 44,500

On the above date, Z is admitted as a partner. X surrenders 1/6th of his share and Y 1/3rd of his share in favour of Z. Goodwill is worth Rs. 60,000. Z brings only 1/2 of his share of goodwill in cash and Rs. 15,000 as his capital. The following revaluations are made :
Stock, Plant, and Machinery are worth 10% less than the book value. The market value of investments is Rs. 12,000. Make a provision of 5% for bad and doubtful debts on debtors and a provision of 5% for a discount on Creditors.
Calculate the new ratio, and sacrificing ratio, and also pass journal entries to record the above arrangement. Also, prepare the Balance Sheet of the firm as newly constituted.

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## The solution of Question 50 Chapter 5 of +2 Part-1: –

CALCULATION OF SACRIFICING RATIO :

 X’s sacrifice Ratio = 1 x 3 6 5 = 3 30
 Y’s sacrifice Ratio = 1 x 2 3 5 = 2 15

SACRIFICING RATIO = 3 : 4

NEW PROFIT SHARING RATIO = OLD SHARE OF OLD PARTNERS

 X’s new share = 3 – 3 5 30 = 15 30
 Y’s new share = 2 – 4 5 30 = 8 30
 Z’s new share = 3 + 2 30 30 = 7 30

NEW PROFIT SHARING RATIO = 15: 8: 7

Goodwill of the firm = Rs. 60,000

 Share of Z = 7 x 60,000 = Rs. 14,000 30

 1 Share of goodwill is brought in cash i.e., 2

 14,000 x 1 = Rs. 7,000 2
 Journal Date Particulars L.F. Debit Credit i Cash A/c Dr. 22,000 To Z’s Capital A/c . 15,000 To Premium A/c 7,000 (Being the cash brought in as capital & goodwill ) ii X’s Capital A/c Dr. 3,000 Y’s Capital A/c Dr. 2,000 To Goodwill A/c 5,000 (Being goodwill written off) iii Premium A/c Dr. 7,000 Z’s Current A/c Dr. 7,000 To X’s Capital A/c 6,000 To Y’s Capital A/c 8,000 (Being assets revalued ) iv Revaluation A/c Dr. 3,010 To Stock A/c(10% of 10,000) 770 To Plant & Machinery A/c 1,800 To provisional for doubtful debts A/c) 410 (Being assets revalued ) v Investment A/c Dr. 9,000 Reserve for a discount on creditors Capital A/c Dr. 310 To Revaluation A/c 9,310 (Being assets & liabilities revalued ) vi Revaluation A/c Dr. 6,300 To X’s Capital A/c 3,780 To Y’s Capital A/c 2,520 (Being profit on revaluation distributed ) vii General reserve A/c Dr. 5,000 To X’s Capital A/c 3,000 To Y’s Capital A/c 2,000 (Being GENERAL RESERVE distributed )
 Partners’ Capital Account Particulars X Y Z Particulars X Y Z To Goodwill A/c 3,000 2,000 By Balance b/d 16,800 13,200 By Cash A/c 15,000 By Premium A/c 3,000 4,000 By Z’s Current A/c 3,000 4,000 By Revaluation A/c(Profit) 3,780 2,520 By General reserves 3,000 2,000 To Balance c/d 26,580 23,720 15,000 29,580 25,720 15,000 29,580 25,720 15,000
 Balance Sheet Liabilities Amount Assets Amount Sundry Creditors 6,200 Cash(2000+22000) 24,000 Less: Reserve for discount 310 5,890 Stock (7700-770) 6,930 Bills Payable 3,300 Debtors 8,800 Capital Account Less provision 440 8,360 X 26,580 Plant & Machinery 16,200 Y 23,720 Investments (3000+9000) 12,000 Z 15,000 65,300 Z’s Current A/c 7,000 74,490 74,490

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