Question 50 Chapter 5 of +2-Part-1
50. (Provision for a discount on Creditors ) The balance sheet of X and 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 | = | 3 | x | 1 |
| 5 | 6 | |||
| = | 3 | |||
| 30 |
| Y’s sacrifice Ratio | = | 2 | x | 1 |
| 5 | 3 | |||
| = | 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 | + | 4 |
| 30 | 30 | |||
| = | 7 | |||
| 30 |
NEW PROFIT SHARING RATIO = 15: 8: 7
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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 for Goodwill 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 for Goodwill 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 Premium for Goodwill transferred to sacrificed partners’ capital accounts in their sacrificing ratio) | |||||
| 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 and Provisional for doubtful debts created) | |||||
| 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 among old partners in old ratio) | |||||
| 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 for Goodwill 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 for D/D | 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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Chapter-Wise Solution of Usha Publication Accountancy – Part 1 Class 12 – Session 2024-25 as per the PSEB curriculum
Check out Solutions to all questions of the every chapter shown as under. The Solution of Accountancy – Part 1 Class 12 – Session 2024-25 is provided as per the new book published by Usha Publication.
Chapter No. 1 – Accounting Not-for-Profit Organisations (Deleted from the Syllabus)
Chapter No. 2 – Partnership Accounts – I (Introduction)
Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
Also, Check out our Comprehensive Chapter-wise solution of Advanced Accountancy Part 1 Class 12 by Unimax Publication
- Chapter No. 1 – Accounts of Non-Profit Organisations (Deleted from the Syllabus)
- Chapter No. 2 – Partnership Accounts – I (Basic Concepts)
- Chapter No. 3 – Partnership Accounts – II (Goodwill)
- Chapter No. 4 – Partnership Accounts – III (Change in Profit Sharing Ratio among Existing Partners)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
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1. Accountancy – Part 2 Class 12 – Session 2024-25 By Usha Publication
2. Advanced Accountancy Part 2 Class 12 by Unimax Publication