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Question 53 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question No.53 Chapter No.6 - T.S. Grewal +2 Book 2019-Solution

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Question 53 Chapter 6 of +2-A

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53. The Balance Sheet of X, Y and Z who were sharing profits in the ratio of 5 : 3: 2 as at 31st March 2019 is as follows:

Liabilities AmountAssetsAmount
Creditors 50,000Cash at Bank40,000
Employees’ Provident Fund 10,000Sundry Debtors1,00,000
Profit and Loss A/c 85,000Stock80,000
Capital A/cs:  Fixed Assets60,000
X40,000   
Y62,000   
Z33,0001,35,000  
  2,80,000 2,80,000

X retired on 1st Apri  2019 and Y and Z decided to share profits in future in the ratio of 3: 2 respectively. The other terms on retirement were:
a Goodwill of the firm is to be valued at 80,000.
b Fixed Assets are to be depreciated to 57,500.
c Make a Provision for Doubtful Debts at 5% on Debtors.
d A liability for a claim, included in Creditors for 10,000, is settled at 8,000. The amount to be paid to X by Y and Z in such a way that their Capitals are proportionate to their profit-sharing ratio and leave a balance of 15,000 in the Bank Account.
Prepare Profit and Loss Adjustment Account and Partners’ Capital Accounts.

 

 

The solution of Question 53 Chapter 6 of +2-A: –

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Revaluation Account
Particular
AmountParticularAmount
To Fixed Assets A/c 60,000 – 57,5002,500By Creditors 10,000 – 8,0002,000
To Provision for Doubtful Debts5,000  
  By Loss transferred to:  
   X’s Capital A/c2,750 
   Y’s Capital A/c1,650 
   Z’s Capital A/c1,1005,500
  7,500  7,500

 

Partners’ Capital Account
Part.XYZ

Part.

XYZ
To Revaluation A/c2,7501,6501,100By Balance B/d40,00062,00033,000
To X’s Capital A/c24,00016,000By Profit & Loss A/c42,50025,50017,000
    By Y’s Capital A/c24,000
    By Z’s Capital A/c16,000

To Balance c/d 1,19,75061,85032,900    
 1,22,50087,50050,000 1,22,50087,50050,000
To Capital A/c1,19,750By Balance b/d1,19,75061,85032,900
To Balance c/d 1,18,50079,000By Cash A/c56,65046,100
 1,19,7501,18,50079,000 1,19,7501,18,50079,000

 

Working Notes:
Calculation of Gaining Ratio

Old Ratio X, Y and Z = 5:3:2
New Ratio Y and Z = 3:2
Gaining Ratio = New Ratio – Old Ratio

Y’s Share=33
510
     
 =3  
 10  

 

Z’s Share=22
510
     
 =2  
 10  

Adjustment of Goodwill

Total Goodwill of the Firm = 80,000

     
X’s Share of Goodwill=80,000X5
10
     
 =Rs 40,000  

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To be borne by Gaining partners in their Gaining Ratio i.e. 3:2

Y’s Share=40,000X3
5
     
 =Rs 24,000  

 

Z’s Share=40,000X2
5
     
 =Rs 16,000  

 

Adjustment of Capital

X’s Capital before adjustment = 1,19,750
Y’s Capital before adjustment = 61,850
Z’s Capital before adjustment = 32,900

Total Capital of New Firm=X’s Capital +Y’s Capital + Z’s Capital + Closing balance of Bank AccountAvailable Bank Balance
 =1,19,750+61,850+32,900+15,00032,000
 =Rs 1,97,500  

New Profit Sharing Ratio = 3:4

Y’s Share of Goodwill=1,97,500X3
5
     
 =Rs 1,18,500  

 

Z’s Share of Goodwill=1,97,500X2
5
     
 =Rs 79,000  

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Balance Sheet
Liabilities
YZ
New Capital Balance1,18,50079,000
Adjusted Old Capital Balance61,85032,900
Cash brought in by the Partner 56,65056,650

 

Cash Account
Particulars
AmountParticularsAmount
Balance b/d40,000Creditors 8,000
Y’s Capital A/c56,650X’s Capital A/c 1,19,750
Z’s Capital A/c 46,100   
   Balance c/d15,000
  1,42,750  1,42,750

 

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
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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