Question 57 Chapter 5 of +2-A
57. X, Y and Z are partners sharing profits and losses in the ratio of 6 : 3 : 1. They admitted W into partnership with effect from 1st April, 2019. New profit-sharing ratio between X, Y, Z and W was agreed to be 3 : 3 : 3 : 1. They also decide to record the effect of the following revaluations without affecting the book values of the assets and liabilities by passing an adjustment entry:
Book Values ( )
Revised Values ( )
Plant and Machinery
3,50,000
3,40,000
Land and Building
5,00,000
5,50,000
Trade Creditors
1,00,000
90,000
Outstanding Expenses
85,000
1,00,000
Pass necessary adjustment entry.
The Content covered in this article:
The solution of Question 57 Chapter 5 of +2-A: – Date Particulars L.F. Debit Credit
Z’s Capital A/c
Dr
7,000
W’s Capital A/c
Dr
3,500
To X’s Capital A/c
10,500
(Being adjustment entry made)
Working Note: –
Calculation of Provision for Doubtful DebtsProvision is always created on the Closing balance of Debtors
Gain/Loss
=
Land & Building + Trade Creditors – Plant & Machinery – Outstanding Expenses
=50,000 + 10,000- 10,000 – 15,000
=35,000
Total Provision For D/D
=
Closing balance of Debtors X
Percentage of Provision
New Provision For D/D
=
Total Provision –
(Old Provision – Bad Debts)
=
3,500
–
(8,000-6,000)
=
3,500
–
2,000
=
1,500
Old Ratio of X, Y and Z
=
6 : 3 : 1
New Ratio of X, Y, Z and W
=
3 : 3 : 3 : 6
Sacrificing Share = Old Ratio – New Ratio
X’s Sacrificing/Gaining Share
=
6
–
3
10
10
Y’s Sacrificing/Gaining Share
=
3
–
3
10
10
Z’s Sacrificing/Gaining Share
=
1
–
3
10
10
W’s Sacrificing/Gaining Share
=
1
10
Adjustment of Revaluation Profit
X will Get from Z & W
=
35,000
X
3
10
=
10,500
Z will pay to X
=
35,000
X
2
10
=
7,000
W will pay to X
=
35,000
X
1
10
=
3,500
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) Cha pter 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
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms
