Question 50 Chapter 5 – Unimax Class 12 Part 1 – 2021
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 :
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
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What is Partnership – Meaning and Its 4 Types
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
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