Question 55 Chapter 5 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 55 Chapter 5 of +2- Part-

Question 55 Chapter 5 of +2-Part-1

Free Accounting book Solution - Class 11 and Class 12

55. (Goodwill is not brought in Cash) The following was the balance sheet of Ajay, Vijay and Kamal as on 31-3-2018:

Liabilities    Rs Assets Rs
Creditors   11,000 Land & buildings 50,000
Bills Payable   6,000 Furniture 7,500
Capital Accounts      Stock 30,000
Ajay 40,000   Debtors 26,500
Vijay 33,500   Cash 1,000
Kamal 25,000 98,500 Input CGST 250
      Input SGST 250
    1,15,500    1,15,500 

They share profits and losses in the ratio of 6: 5: 3. On 1-4-2015 they agreed to admit Subodh into partnership and give him a share of 10 paise in the rupee on the following terms:
(i) That Subodh should bring in Rs. 14,000 as capital.
(ii) That stock is depreciated by 10% and furniture by Rs. 900.
(iii) That a reserve of Rs. 1,300 be made for the outstanding repair bills. (iv) That the value of land and buildings be brought up to Rs. 65,000. (v) That Subodh does not contribute anything for goodwill which was valued Rs. 8,400 for the firm.
Pass necessary journal entries to record the above arrangements and prepare the new Balance Sheet of the firm.

The solution of Question 55 Chapter 5 of +2 Part-1: –

Journal
Date Particulars
L.F. Debit Credit
           
1 Cash A/c Dr.   14,000  
  To Subodh’s Capital A/c       14,000
  (Being capital brought by new partner)      
         
2 Revaluation A/c Dr.   5,200  
  To Stock A/c (10% of 30,000)       3,000
  To Furniture A/c       900
  To outstanding repairs A/c       1,300
  (Being assets and liabilities revalued)        
           
3 Land & Building A/c Dr.   15,000  
  To Revaluation A/c       15,000
  (Being revaluation of assets)        
           
4 Revaluation A/c Dr.   9,800  
  To Ajay’s Capital A/c       4,200
  To Vijay’s Capital A/c       3,500
  To Kamal’s Capital A/c       2,100
  (Being profit on revaluation distributed)        
           
5 Subodh’s Current A/c Dr.   840  
  To Ajay’s Capital A/c       360
  To Vijay’s Capital A/c       300
  To Kamal’s Capital A/c       180
  (Being new partner’s share in goodwill adjusted in
Sacrifice ratio 6:5:3)
       
         
Balance Sheet
Particulars
Amount Particulars Amount
To Stock A/c   3,000 By Land & Buildings A/c   15,000
To Furniture A/c   900      
To O/S Repairs A/c   1,300      
           
To Profit on revaluation transferred to Capital accounts          
– Ajay’ capital A/c 4,200        
– Vijay capital A/c 3,500        
-Kamal capital A/c 2,100 9,800      
    15,000     15,000
Partners’ Capital Account   
Particulars Ajay Vijay Kamal Subodh Particulars Ajay Vijay Kamal
Subodh
          By Balance b/d 40,000 33,500 25,000  
          By Bank A/c       14,000
          By C’s Current A/c 4,200 2,625 2,100  
          By Subodh’s Current A/c 360 300 600  
To Balance c/d 44,560 37,300 27,280 14,000          
  44,560 37,300 27,280 14,000   44,560 37,300 27,280 14,000
Balance Sheet
Liabilities
Amount Assets Amount
Creditors   11,000 Land & Building   65,000
Bills Payable   6,000 Furniture   6,600
Outstanding repair expenses   4,225 Subodh’s current A/c   840
Capital Account     Stock   27,000
Ajay 44,560   Sundry Debtors   26,500
Vijay 34,375   Cash(1000+14,000)   16,340
Kamal 27,280   Input CGST   250
Subodh 14,000 1,20,215 Input CGST   250
    1,41,440     1,41,440

WORKING NOTES :

Total goodwill of the firm = Rs.8,400

 

New partner’s share = = 1 X 8,400
10
         
  = 840   Not brought in cash


Comment if you have any questions.

Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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

2 Book 1 min - Question 55 Chapter 5 of +2 Part-1 - USHA Publication 12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firm

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