Question 50 Chapter 5 - Unimax Class 12 Part 1 - 2021

Question 50 Chapter 5 – Unimax Class 12 Part 1 – 2021

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The solution of Question 50 Chapter 5 – Unimax Class 12 Part 1

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

50. The Balance Sheet of A and B carrying on business in partnership and sharing profits in proportion of 2/3rd and 1/3rd respectively, stood as follows :

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Liabilities	Amount	Assets	Amount
Creditors	8300	Cash	2000
Reserve	3500	Debtors	28,000
Capital Accounts		Furniture	8000
A :	51450	Stock	22000
B :	36750	Machinery	40000

	1,00,000		1,00,000

They admitted C into partnership giving him 1/5th share of profits on the following terms :
(a) The goodwill of the firm is to be valued at two years’ purchase of the average profits of the last three-years, which amounted to Rs. 20000, Rs. 15000 and Rs. 22000.
(b) C is to bring in cash his share of goodwill.
(c) C is to bring in capital in proportion to his profit sharing arrangements with other partners.
Give Journal entries prepare capital a/cs and opening Balance Sheet of the firm and also state their future profit sharing raito.

The solution of Question 50 Chapter 5 – Unimax Class 12 Part 1

Journal

Date	Particulars		L.F.	Debit	Credit
	General Reserve a/c	Dr.		3500
	To A’s Capital A/c				2333
	To B’s Capital A/c				1167
	(Being reserve transferred to old partners in old profit showing ratio)
	Cash a/c	Dr.		32425
	To C’s Capital A/c				24825
	To Premium A/c				7600
	(Being Capital and goodwill brought in cash by new partner)
	Premium a/c	Dr.		7600
	To A’s Capital A/c				5067
	To B’s Capital A/c				2533
	(Being goodwill credited to old partner’s a/c)

Capital Accounts

Particulars	A	B	C	Particulars	A	B	C
To Balance c/d	48850	40450	24825	By Balance b/d	51450	36750	_
				By Cash A/c	_	_	24825
				By Premium A/c	5067	2533	_
				By G.R A/c	2333	1167	_


	58850	40450	24825		58850	40450	24825

Balance Sheet

Liabilities		Rs.	Assets	Rs.
Sundry Creditors		8300	Cash	34425
Capital Accounts			Cash	22000
A	58850		Machinery	40000
B	40450		Debtors	28000
C	24825	124125	Furniture	8000


		132425		132425

Working Note

(A) Calculation of C’s share of G.W.

Average profit of last 3 years =15000 + 20000 + 22000/3
= Rs. 19000
Value of firm’s G.W. = 19000 X 2 = Rs. 38000
C’s share = 38000 X 1/5
= Rs. 7600
(B) Calculation of Prop. Capital to brought by C.
For 4/5 share capital contributed = Rs. 99300
For 4/5 share capital contributed = Rs. 99300 X 5/4
For 4/5 share capital contributed = Rs. 99300 X 5/4 X 1/5
= Rs. 24825