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

Question 50 Chapter 5 of +2- Part-

Question 50 Chapter 5 of +2-Part-1

Free Accounting book Solution - Class 11 and Class 12

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.

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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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 50 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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