Question 56 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 56 Chapter 5 of +2-A

Question 56 Chapter 5 of +2-A

56. X and Y are partners in a firm sharing profits in the ratio of 3 : 2. They
admitted Z as a partner for 1/4th share of profits. At the time of admission of Z, Debtors and Provision for Doubtful Debts appeared at 76,000 and 8,000 respectively. 6,000 of the debtors proved bad. A provision of 5% is to be created on Sundry Debtors for doubtful debts. Pass the necessary
Journal entries.

The solution of Question 56 Chapter 5 of +2-A: –

 

Date Particulars
L.F. Debit Credit
  Bad debts A/c Dr   6,000  
  To Debtors A/c       6,000
  (Being Bad debts incurred during the year)        
  Provision for Doubtful Debts A/c Dr   6,000  
  To Bad Debts A/c       6,000
  (Being Bad debts adjusted with Provision for Doubtful Debts)        
  Revaluation A/c*1 Dr   1,500  
  To Provision for Doubtful Debts A/c       1,500
  (Being new provision for doubtful debts created)        
  X’s Capital A/c Dr   900  
  Y’s Capital A/c Dr   600  
  To Revaluation A/c       1,500
  (Being Loss on revaluation distribution among the old partner in their old profit sharing ratio)        

 

Working Note: –

Calculation of Provision for Doubtful Debts
Provision is always created on the Closing balance of Debtors

Closing balance of Debtors = Opening balance of Debtors – Bad Debts
  = 76,000 6,000
  = 70,000
   
Total Provision For D/D = Closing balance of Debtors X  Percentage of  Provision
  = 70,000 X 5%
  = 3,500
   
New Provision For D/D = Total Provision –  (Old Provision – Bad Debts)
  = 3,500 (8,000-6,000)
  = 3,500
2,000
  = 1,500    

 


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 56 Chapter 5 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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