Question 52 Chapter 5 of +2-Part-1
52. (Hidden Goodwill)Deepika & Rajshree are partners in the firm sharing profits & losses in ratio 3:2. On 31st March 2019 their balance sheet was as under :
| Liabilities | Rs | Assets | Rs | ||
| Sundry creditors | 16,000 | Cash in hand | 1,200 | ||
| Public Deposits | 61,000 | Cash at Bank | 28,000 | ||
| Banks overdrafts | 6,000 | Stock | 32,000 | ||
| Outstanding liabilities | 2,000 | Prepaid insurance | 1,000 | ||
| Capital Accounts | Sundry debtors | 28,800 | |||
| Deepika | 48,000 | Less reserve for doubtful debts | 800 | 28,000 | |
| Rajshree | 40,000 | 88,000 | Plant and machinery | 48,000 | |
| Land & Building | 50,000 | ||||
| Furniture | 10,000 | ||||
| 1,73,000 | 1,73,000 |
On the above date, the partners decide to admit Anshu as a partner on the following
Terms :
(i) The new profit sharing ratio of Deepika Rajshree and Anshu will be 5: 3:2 respectively.
(ii) Anshu will bring Rs. 32,000 as his capital.
(iii)Anshu is unable to bring in cash his share of goodwill. They further decided to calculate goodwill on the basis of Anshu’s share in the profits and the capital contribution made by him to the firm.
(iv) Plant and machinery is to be valued at Rs. 60,000; stock at Rs. 40,000 and Reserve for doubtful debts is to be maintained at Rs. 4,000. Value of land and building has appreciated by 20% furniture has depreciated by 10%.
(v) There is an additional liability of Rs. 8,000 being outstanding salary payable to employees of the firm. This liability is not included in the outstanding liabilities stated in the above balance sheet. Partners decide to show this liability in the books of accounts of the reconstituted new firm.
Prepare revaluation account, partners’ capital accounts, and the balance sheet of Deepika, Rajshree, and Anshu.
The solution of Question 52 Chapter 5 of +2 Part-1: –
| Revaluation Account |
|||||
| Particulars |
Amount | Particulars | Amount | ||
| To Provision for doubtful debts | 3,200 | By Plant & Machinery | 12,000 | ||
| To Furniture A/c | 1,000 | By Stock | 8,000 | ||
| To Outstanding salary A/c | 8,000 | By Land & Building | 10,000 | ||
| To profit on Revaluation | |||||
| – Deepika 3/5 | 10,680 | ||||
| – Rajshree 2/5 | 7,120 | 17,800 | |||
| 30,000 | 30,000 | ||||
| Partners’ Capital Account | |||||||
| Particulars | Deepika | Rajshree | Anshu | Particulars | Deepika | Rajshree | Anshu |
| By Balance b/d | 48,000 | 40,000 | |||||
| By Bank A/c | 32,000 | ||||||
| By Anshu’s current A/c (profit) |
2,220 | 2,220 | |||||
| By Revaluation A/c | 10,890 | 7,120 | |||||
| To Balance c/d | 60,900 | 49,340 | 32,000 | ||||
| 60,900 | 49,340 | 32,000 | 60,900 | 49,340 | 32,000 | ||
| Balance Sheet |
|||||
| Liabilities |
Amount | Assets | Amount | ||
| Sundry Creditors | 16,000 | Cash in hand | 1,200 | ||
| Public Deposits | 61,000 | Cash at Bank | 34,800 | ||
| Banks overdrafts | 6,000 | Stock | 40,000 | ||
| Outstanding liabilities | 2,000 | Prepaid insurance | 1,000 | ||
| Outstanding salary | 8,000 | Sundry debtors | 28,800 | ||
| Capital Accounts | Less reserve for doubtful debts |
4,000 | 24,800 | ||
| A | 60,900 | Plant and machinery | 60,000 | ||
| B | 49,340 | Land & Building | 60,000 | ||
| C | 32,000 | 1,42,240 | Furniture | 9,000 | |
| Anshu current A/C | 4,440 | ||||
| 2,35,240 | 2,35,240 | ||||
WORKING NOTES :
(i) Sacrificing ratio
| Deepika | : | Rajshree | : | Anshu | ||
| Old ratio | = | 3 | : | 2 | : | – |
| New ratio | = | 5 | : | 3 | : | 2 |
Partner’s sacrifice = old Share – new share
| Deepika’s sacrifice | = | 3 | – | 5 |
| 5 | 10 | |||
| = | 1 | |||
| 10 |
| Rajshree’s sacrifice | = | 2 | – | 3 |
| 5 | 10 | |||
| = | 1 | |||
| 10 |
SACRIFICING RATIO = 1 : 1
(ii)Good will
Total Capital of the firm = 32,000X 5 = Rs. 1,6000
| Combined Capital: | ||
| Deepika | = | 58,680 |
| Rajshree | = | 47,120 |
| Anshu | = | 32,000 |
| = | 1,37,800 | |
| Less : Combined Capitals of partners : | = | 22,000 |
Anshu’s share = Rs. 4,440
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Also, Check out the solved question of previous Chapters: –
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
