Question 52 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question No.52 Chapter No.6 T.S. Grewal 2 Book 2019 Solution min min 1 1024x576 - Question 52 Chapter 6 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1

Question 52 Chapter 6 of +2-A

52. Following is the Balance Sheet of Kusum, Sneh and Usha as on 31st March 2019, who have agreed to share profits and losses in the proportion of their capitals:

Liabilities AmountAssets Amount
Capital A/cs:  Land and Building  4,00,000
Kusum4,00,000 Machinery 6,00,000
Sneh6,00,000 Closing Stock 2,00,000
Usha4,00,000`14,00,000Sundry Debtors2,20,000 
Employees’ Provident Fund 70,000Less: Provision for Doubtful Debts20,0002,00,000
Workmen Compensation Reserve 30,000Cash at Bank  2,00,000
Sundry Creditors 1,00,000   
  16,00,000  16,00,000

On 1st April, 2019, Kusum retired from the firm and the remaining partners decided to carry on the business. It was agreed to revalue the assets and reassess the liabilities on that date, on the following basis:
a Land and Building be appreciated by 30%.
b Machinery be depreciated by 30%.
c There were Bad Debts of 35,000.
d The claim against Workmen Compensation Reserve was estimated at 15,000.
e Goodwill of the firm was valued at 2,80,000 and Kusum’s share of goodwill was adjusted against the Capital Accounts of the continuing partners Sneh and Usha who have decided to share future profits in the ratio of 3 : 4 respectively.
f Capital of the new firm in total will be the same as before the retirement of Kusum and will be in the new profit-sharing ratio of the continuing partners.
g Amount due to Kusum be settled by paying 1,00,000 in cash and balance by transferring to her Loan Account which will be paid later on.
Prepare Revaluation Account, Capital Accounts of Partners and Balance Sheet of the new firm after Kusum’s retirement.

 

 

The solution of Question 52 Chapter 6 of +2-A: –

 

Revaluation Account
Particular
AmountParticularAmount
To Machinery A/c1,80,000By Land and Building A/c1,20,000
To Bad Debts A/c 35,000 – 20,00015,000  
  By Loss transferred to:  
   Kusum’s Capital A/c21,429 
   Sneh’s Capital A/c32,142 
   Usha’s Capital A/c21,42975,000
  1,95,000  1,95,000

 

Partners’ Capital Account
Part.KusumSnehUsha

Part.

KusumSnehUsha
To Revaluation A/c21,42932,14221,429By Balance B/d4,00,0006,00,0004,00,000
To Usha’s Capital A/c80,000By Work
men Compensa
tion Fund A/c
4,2866,4284,286
To Bank A/c1,00,000_By Usha’s Capital A/c80,000
To Kusum’s Loan A/c3,62,857By C’s Capital A/c1,833

To Balance c/d 35,8005,74,2863,02,857    
 4,84,2866,06,4284,04,286 4,84,2866,06,4284,04,286
    By Balance b/d5,74,2863,02,857
To Balance c/d 6,00,0008,00,000By Cash A/c25,7144,97,143
 6,00,0008,00,000 6,00,0008,00,000

 

Balance Sheet
Liabilities
AmountAssetsAmount
Creditors1,00,000Land & Building 5,20,000
Employee’s Provident Fund70,000Machinery6,00,000 
Workmen’s Compensation Claim 15,000Less: Deprecition1,80,0004,20,000
Kusum’s Loan 3,62,857Stock 2,00,000
Capital:  Sundry Debtors 2,20,000 – 35,000 1,85,000
Sneh6,00,000 Bank 6,22,857
Usha8,00,00014,00,000  
  19,47,857  19,47,857

 

Working Notes:
Calculation of Profit-Sharing Ratio

Old Ratio Kusum, Sneh and Usha = 2:3:2
New Ratio Sneh and Usha = 3:4
Gaining Ratio = New Ratio – Old Ratio
Gaining Ratio = 3 : 1

Sneh’s Gain=33
77
     
 =Nil  

 

Usha’s Gain=42
77
     
 =2  
 7  

Adjustment of Goodwill

Total Goodwill of the Firm = 2,80,000

     
Kusum’s Share of Goodwill=2,80,000X2
7
     
 =Rs 80,000  

It is to be adjusted by the Gaining partners i.e. only by Usha

Adjustment of Capital

Total Capital of Firm before Kusum’s Retirement = 14,00,000
New Ratio = 3:4

Sneh’s Share of Goodwill=14,00,000X3
7
     
 =Rs 6,00,000  

 

Usha’s Share of Goodwill=14,00,000X4
7
     
 =Rs 8,00,000  

 

Balance Sheet
Liabilities
SnehUsha
New Capital Balance6,00,0008,00,000
Adjusted Old Capital Balance5,74,2863,02,857
Cash brought in by the Partner 25,71444,97,143

 

Cash Account
Particulars
AmountParticularsAmount
Balance b/d2,00,000Kusum’s Capital A/c 1,00,000
Sneh’s Capital A/c25,714   
Usha’s Capital A/c 4,97,143   
   Balance c/d6,22,857
  7,22,857  7,22,857

 

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

 

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2 Book 1 min - Question 52 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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