Question No.51 Chapter No.6 T.S. Grewal 2 Book 2019 Solution min min 1 - Question 51 Chapter 6 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1

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 AmountAssets Amount
Creditors 30,000Cash in Hand 18,000
Bills Payable 16,000Debtors25,000 
General Reserve 12,000Less: Provision for Doubtful Debts3,00022,000
Capital A/cs:  Stock 18,000
A40,000 Furniture 30,000
B40,000 Machinery 70,000
C30,0001,10,000Goodwill 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
AmountParticularAmount
To Provision for Doubtful Debts1,000By Creditors6,000
To Stock 18,000 × 10%1,800  
To Outstanding Claim for Damages1,100  
To Furniture 30,000 × 5%1,500  
To Profit transferred to    
A’s Capital A/c300    
B’s Capital A/c200    
C’s Capital A/c100600   
  6,000  6,000

 

Partners’ Capital Account
Part.ABC

Part.

ABC
To B’s Capital A/c5,5001,833By Balance B/d40,00040,00030,000
To X’s Loan A/c5,0003,3331,667By Revaluation A/c300200100
To Cash A/c48,200_By A’s Capital A/c5,500
    By C’s Capital A/c1,833

To Balance c/d 35,80028,600    
 46,30051,53332,100 46,30051,53332,100
To Cash A/c2,450By Balance b/d35,80028,600
To Balance c/d 78,45026,150By Cash A/c42,650
 78,45028,600 78,45028,600

 

Balance Sheet
Liabilities
AmountAssetsAmount
Creditors24,000Cash in Hand 11,000
Bills Payable16,000Debtor25,000 
Outstanding Claim for Damages 1,100Less: Provision for Doubtful Debts4,00021,000
Capital:  Stock 16,200
A78,450 Furniture 28,500
C26,1501,04,600Machinery70,000
  1,45,700  1,45,700

 

Cash Account 
Particulars
AmountParticularsAmount
Balance b/d18,000B’s Capital A/c 48,200
A’s Capital A/c42,650C’s Capital A/c 2,450
   Balance c/d10,000
  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

Adjustment of Goodwill

Goodwill of the firm = Rs 22,000

     
B’s Share of Goodwill=22,000X2
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=7,333X3
4
     
 =Rs 5,500  

 

C ‘ share=7,333X1
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 CashExisting Balance of Cash
 =48,200 + 10,00018,000
 =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=1,04,600X3
4
     
 =Rs 78,450  

 

C ‘ share=1,04,600X1
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)

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

 

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

2 Book 1 min - Question 51 Chapter 6 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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