# Question 51 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question No.51 Chapter No.6 - T.S. Grewal +2 Book 2019-Solution

Question 51 Chapter 6 of +2-A

51. A B and C are partners in firm sharing profits and losses in the ratio of 3 : 2: 1. Their Balance Sheet as at 31st March 2019 is:

 Liabilities Amount Assets Amount Creditors 30,000 Cash in Hand 18,000 Bills Payable 16,000 Debtors 25,000 General Reserve 12,000 Less: Provision for Doubtful Debts 3,000 22,000 Capital A/cs: Stock 18,000 A 40,000 Furniture 30,000 B 40,000 Machinery 70,000 C 30,000 1,10,000 Goodwill 10,000 1,68,000 1,68,000

B retires on 1st April 2019 on the following terms:
a Provision for Doubtful Debts is raised by 1,000.
b Stock to be reduced by 10% and Furniture by 5%.
c Their is an outstanding claim of damages of 1,100 and it is to be provided for.
d Creditors will be written back by 6,000.
e Goodwill of the firm is valued at 22,000.
f B is paid in full with the cash brought in by A and C in such a manner that their capitals are in proportion to their profit-sharing ratio and Cash in Hand remains at 10,000.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of A and C.

## The solution of Question 51 Chapter 6 of +2-A: –

 Revaluation Account Particular Amount Particular Amount To Provision for Doubtful Debts 1,000 By Creditors 6,000 To Stock 18,000 × 10% 1,800 To Outstanding Claim for Damages 1,100 To Furniture 30,000 × 5% 1,500 To Profit transferred to A’s Capital A/c 300 B’s Capital A/c 200 C’s Capital A/c 100 600 6,000 6,000

 Partners’ Capital Account Part. A B C Part. A B C To B’s Capital A/c 5,500 – 1,833 By Balance B/d 40,000 40,000 30,000 To X’s Loan A/c 5,000 3,333 1,667 By Revaluation A/c 300 200 100 To Cash A/c – 48,200 _ By A’s Capital A/c – 5,500 – By C’s Capital A/c – 1,833 – To Balance c/d 35,800 – 28,600 46,300 51,533 32,100 46,300 51,533 32,100 To Cash A/c – – 2,450 By Balance b/d 35,800 – 28,600 To Balance c/d 78,450 – 26,150 By Cash A/c 42,650 – – 78,450 – 28,600 78,450 – 28,600

 Balance Sheet Liabilities Amount Assets Amount Creditors 24,000 Cash in Hand 11,000 Bills Payable 16,000 Debtor 25,000 Outstanding Claim for Damages 1,100 Less: Provision for Doubtful Debts 4,000 21,000 Capital: Stock 16,200 A 78,450 Furniture 28,500 C 26,150 1,04,600 Machinery 70,000 1,45,700 1,45,700

 Cash Account Particulars Amount Particulars Amount Balance b/d 18,000 B’s Capital A/c 48,200 A’s Capital A/c 42,650 C’s Capital A/c 2,450 Balance c/d 10,000 60,650 60,650

#### Working Notes:Calculation of Profit-Sharing Ratio

Old Ratio A, B and C = 3: 2: 1
B retires from the firm
∴ New Ratio A and C = 3: 1 and
Gaining Ratio = 3 : 1

Goodwill of the firm = Rs 22,000

 B’s Share of Goodwill = 22,000 X 2 6 = Rs 7,333

This share of goodwill is to be distributed between A and C in their gaining ratio i.e. 3: 1.

 A ‘ share = 7,333 X 3 4 = Rs 5,500

 C ‘ share = 7,333 X 1 4 = Rs 1,833

#### Adjustment of Partners’ Capital after B’s Retirement

 Amount to be brought in by A and C = Cash to be paid to B + Minimum Balance of Cash – Existing Balance of Cash = 48,200 + 10,000 – 18,000 = Rs 40,200

Combined Capital of A and C after of all adjustments = 35,800 + 28,600 = Rs 64,400
∴ Total Capital of the Firm = Amount to be brought in by A and C + Combined Capital of A and C
= 40,200 + 64,400 = 1,04,600

 A’s New Capital = 1,04,600 X 3 4 = Rs 78,450

 C ‘ share = 1,04,600 X 1 4 = Rs 26,150

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. 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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