# 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

Question 53 Chapter 6 of +2-A

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 Amount Assets Amount Creditors 50,000 Cash at Bank 40,000 Employees’ Provident Fund 10,000 Sundry Debtors 1,00,000 Profit and Loss A/c 85,000 Stock 80,000 Capital A/cs: Fixed Assets 60,000 X 40,000 Y 62,000 Z 33,000 1,35,000 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: –

 Revaluation Account Particular Amount Particular Amount To Fixed Assets A/c 60,000 – 57,500 2,500 By Creditors 10,000 – 8,000 2,000 To Provision for Doubtful Debts 5,000 By Loss transferred to: X’s Capital A/c 2,750 Y’s Capital A/c 1,650 Z’s Capital A/c 1,100 5,500 7,500 7,500

 Partners’ Capital Account Part. X Y Z Part. X Y Z To Revaluation A/c 2,750 1,650 1,100 By Balance B/d 40,000 62,000 33,000 To X’s Capital A/c – 24,000 16,000 By Profit & Loss A/c 42,500 25,500 17,000 By Y’s Capital A/c 24,000 – – By Z’s Capital A/c 16,000 – – To Balance c/d 1,19,750 61,850 32,900 1,22,500 87,500 50,000 1,22,500 87,500 50,000 To Capital A/c 1,19,750 – – By Balance b/d 1,19,750 61,850 32,900 To Balance c/d – 1,18,500 79,000 By Cash A/c – 56,650 46,100 1,19,750 1,18,500 79,000 1,19,750 1,18,500 79,000

#### 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 = 3 – 3 5 10 = 3 10

 Z’s Share = 2 – 2 5 10 = 2 10

Total Goodwill of the Firm = 80,000

 X’s Share of Goodwill = 80,000 X 5 10 = Rs 40,000

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

 Y’s Share = 40,000 X 3 5 = Rs 24,000

 Z’s Share = 40,000 X 2 5 = Rs 16,000

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 Account – Available Bank Balance = 1,19,750+61,850+32,900+15,000 – 32,000 = Rs 1,97,500

New Profit Sharing Ratio = 3:4

 Y’s Share of Goodwill = 1,97,500 X 3 5 = Rs 1,18,500

 Z’s Share of Goodwill = 1,97,500 X 2 5 = Rs 79,000

 Balance Sheet Liabilities Y Z New Capital Balance 1,18,500 79,000 Adjusted Old Capital Balance 61,850 32,900 Cash brought in by the Partner 56,650 56,650

 Cash Account Particulars Amount Particulars Amount Balance b/d 40,000 Creditors 8,000 Y’s Capital A/c 56,650 X’s Capital A/c 1,19,750 Z’s Capital A/c 46,100 Balance c/d 15,000 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)

• 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