Question 51 Chapter 5 – Unimax Class 12 Part 1 – 2021

Question 51 Chapter 5 - Unimax Class 12 Part 1 - 2021

Question 51 Chapter 5 – Unimax Class 12 Part 1 – 2021

Free Accounting book Solution - Class 11 and Class 12

51. A and B were in partnership sharing profits and losses in the proportion of 2/3rd and 1/3rd respectively. Their Balance Sheet figures on 31st December, 2020 were as follows :
Cash Rs. 1000 ; Sundry Debtors Rs. 15000 ; Stock Rs. 22000 ; Plant and Machinery Rs. 4000 ; Sundry Creditors Rs. 2000 ; Bank Overdraft Rs. 15000 ; A’s Capital Rs. 15000 ; B’s Capital Rs. 10000.
On 1st January, 2021, they admitted C into partnership on the following terms :
(a) C to purchase 1/4th share of the goodwill for Rs. 3000 and to provide Rs. 10000 as capital.
(b) Profits and losses are to be shared in the proportions of 1/2 to A, 1/4 to B and 1/4 to C.
(c) Plant and Machinery is to be reduced by 10% and Rs. 500 are to be provided for estimated bad debts. Stock is to be taken at a value of Rs. 24940.
(d) By bringing in or withdrawing cash the capitals of A and B are to be made proportionate to that of C on their profits sharing basis.
Set out entries relating to the above arrangement in the firm’s Journal, give the partners’ capital accounts in tabular form and submit the opening Balance Sheet of the new firm.

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

Journal

Date Particulars   L.F. Debit Credit
  Stock a/c Dr.   2940  
      To Revaluation A/c       1500
  (Being value of assets increased)        
  Revaluation a/c Dr.   900  
      To Plant and Machinery A/c       400
      To Bad debts A/c       500
  (Being value of asset decreased)        
  Revaluation a/c Dr.   2040  
      To A’s Capital A/c       1360
      To B’s Capital a/c       680
  (Being Profit on revaluation transferred to old partner’s capital a/c in old ratio)        
           

 

Date Particulars   L.F. Debit Credit
  Cash a/c Dr.   13000  
      To C’s Capital A/c       10000
      To Premium A/c       3000
  (Being capital and goodwill brought by partner)        
  Premium a/c Dr.   3000  
      To A’s Capital A/c       2000
      To B’s Capital A/c       1000
  (Being goodwill credited among old partners)        
  Cash a/c Dr.   1640  
      To A’s Capital A/c       1640
  (Being capital brought by old partners)        
  B’s Capital a/c     1680  
      To Cash A/c       1680
  (Being capital withdrawn)        

  Revaluation A/c

Particulars   Rs. Particulars Rs.
To Plant and Machinery a/c   400 By Stock 2940
To Profit on revaluation a/c        
A (2 : 1) 1360      
B 680      
To Bad debts A/c   500    
    2940   2940

  Capital Accounts

Particulars A B C Particulars A B    C
To Cash A/c 1680 By Balance b/d 15000 10000
To Balance c/d 20000 10000 10000 By Cash A/c 1640 10000
        By Premium A/c 2000 1000
        By profit on revaluation a/c 1360 680
               
               
  20000 11680 10000   20000 11680 10000

  Balance Sheet

 Liabilities
  Rs.  Assets
  Rs.
Sundry Creditors   2000 Cash (1000 + 10000 + 3000 + 1640 – 1680)   13960
Capital Accounts     Stock   24940
A 20000   Plant and Machinery   3600
B 10000   Debtors 15000  
C 10000   Less Provision for bad debts 500 14500
Bank Overdraft          
           
    57000     57000

Working Note
(A) A’s sacrifice = 2/3 – 2/4 = 2/12
B’s sacrifice = 1/3 – 1/4 = 1/12
S.R. = 2 : 1
(B) Adjustments of capital
Total capital of firm = 10000 X 4/1 = Rs. 40000
A’s adjustment capital = 40000 X 2/4 = Rs. 20000
B’s adjustment capital = 40000 X 1/4 = Rs. 10000
B’s capital = Rs. 10000

 

What is Partnership – Meaning and its Types

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

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

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

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

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