Question 58 Chapter 5 of +2-Part-1
58. (Adjustment of capital on the basis of NPS) The following is the balance sheet of A , B & C sharing profits & losses in the ratio 6/25, 5/15 & 3/14 :
|Creditors||9,000||Land & Building||24,000|
They agreed to take D into partnership and give him a share of 1/8th in the rupee on the following terms:
(a) that D should bring in Rs. 4,200 as goodwill and Rs. 7,000 as his capital.
(b) that furniture is depreciated by 12%.
(c) that stock is valued at 90%.
(d) that a reserve of 5% is created for doubtful debts.
(e) that the value of land and buildings have appreciated being brought up to Rs. 31,000.
(f)that after making the above adjustments the capital accounts of the old partners (who continue to share in the same proportion as before) be adjusted on the basis of the proportion of D’s capital to his share in the business i.e. actual cash to paid off to or brought in by the old partners, as the case may be.
Prepare cash account, Profit and loss adjustment account, and the balance sheet of the new firm.
The Content covered in this article:
The solution of Question 58 Chapter 5 of +2 Part-1: –
|Profit & Loss adjustment account|
|To Furniture||420||By Land & Buildings A/c||7,000|
|To Provision for doubtful debts||630|
|To Profit on revaluation transferred to Capital accounts|
|To Balance b/d||900||By A’s Capital A/C||1,750|
|To D’s Capital A/C||7,000||By B’s Capital A/C||1,625|
|To Premium A/c||4,200||By Balance c/d||9,350|
|To C’s Capital A/C||625|
|Balance Sheet |
|Less reserve for doubtful debts||630||11,970|
|A||21,000||Land & Building||3,080|
WORKING NOTES :
D’s capital = Rs. 7,000
Total Capital on the basis of D’s Capital = Rs.7,000X 8 = Rs. 56,000
New ratio of A : B : C 😀 was 6 : 5: 3 : 2
|A’s capital a/c||=||6||X||56,000|
|B’s capital a/c||=||5||X||56,000|
|C’s capital a/c||=||3||X||56,000|
|D’s capital a/c||=||2||X||56,000|
|A’s capital account|
|To Cash Account||1,750||By Balance b/d||19,000|
|To Balance c/d||21,000||By Revaluation Account||1,950|
|By Premium Account||1,800|
|B’s capital account|
|To Cash Account||1,625||By Balance b/d||16,000|
|To Balance c/d||17,500||By Revaluation Account||1,625|
|By Premium Account||1,500|
|C’s capital account|
|To Balance c/d||10,500||By Balance b/d||8,000|
|By Revaluation Account||925|
|By Premium Account||900|
|By Cash Account||625|
|D’s capital account|
|To Balance c/d||7,000||By Bank Account||7,000|
Comment if you have any questions.
Also, Check out the solved question of previous Chapters: –
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement