Question 50 Chapter 5 of +2- Part-

Question 50 Chapter 5 of +2-Part-1

50. (Provision for discount on Creditors ) the balance sheet of X& Y who are partners sharing profits in ratio 3:2 on 31st march ,20190 is as under :

Liabilities  RsAssetsRs
Creditors 6,200Cash 2,000
Bills Payable 3,300Stock7,700
General Reserve 5,000Debtors8,800
Capital Account  Plant & Machinery18,000
X16,800 Investments 3,000
Y13,20030,000Goodwill5,000
  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 favor 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 new ratio, sacrificing ratio, 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=1x3
65
     
 =3  
 30  
Y’s sacrifice Ratio=1x2
35
     
 =2  
 15  

SACRIFICING RATIO = 3 : 4

NEW PROFIT SHARING RATIO = OLD SHARE OF OLD PARTNERS

X’s new share=32
530
     
 =15  
 30  
Y’s new share=24
530
     
 =8  
 30  
Z’s new share=3+2
3030
     
 =7  
 30  

NEW PROFIT SHARING RATIO = 15 : 8 : 7

Goodwill of the firm = Rs. 60,000share of Z =7x60,000=Rs. 14,000
30
1Share of goodwill is brought in cash i.e.,14,000x1=Rs. 7,000
22
Journal
DateParticulars
L.F.DebitCredit
2019     
 Cash A/cDr. 22,000 
 To Z’s Capital A/c.  15,000
  To Premium A/c   7,000
 (Being the cash brought in as capital & goodwill )   
     
 X’s Capital A/cDr. 3,000 
 Y’s Capital A/cDr. 2,000 
 To Goodwill A/c   5,000
 (Being goodwill written off)    
      
 Premium A/cDr. 7,000 
 Z’s Current A/cDr. 7,000 
 To X’s Capital A/c   6,000
 To Y’s Capital A/c   8,000
 (Being assets revalued )    
      
 Revaluation A/cDr. 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 )    
      
 Investment A/cDr. 9,000 
 Reserve for discount on creditors Capital A/cDr. 310 
 To Revaluation A/c   9,310
 (Being assets & liabilities revalued )    
      
 Revaluation A/cDr. 6,300 
 To X’s Capital A/c   3,780
 To Y’s Capital A/c   2,520
 (Being profit on revaluation distributed )    
      
 General reserve A/cDr. 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 
ParticularsXYZParticularsXYZ
To Goodwill A/c3,0002,000 By Balance b/d16,80013,200 
    By Cash A/c  15,000
    By Premium A/c3,0004,000 
    By Z’s Current A/c3,0004,000 
    By Revaluation A/c
(Profit)
3,7802,520 
    By General reserves3,0002,000 
To Balance c/d 29,58023,72025,000    
 29,58025,72015,000 29,58025,72015,000
Balance Sheet
Liabilities
AmountAssetsAmount
Sundry Creditors6,200 Cash(2000+22000) 24,000
Less : Reserve for discount3105,890Stock (7700-770) 6,930
Bills Payable 3,300Debtors8,800 
Capital Account  Less provision4408,360
X26,580 Plant & Machinery 16,200
Y23,720 Investments (3000+9000) 12,000
Z15,00065,300Z’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

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

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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