Question 58 Chapter 5 - Unimax Class 12 Part 1

Question 58 Chapter 5 – Unimax Class 12 Part 1 – 2021

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The solution of Question 58 Chapter 5 – Unimax Class 12 Part 1: –

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

58. The Balance Sheet of X and Y who are partners sharing profits in the ratio 3 : 2 on 31st December, 2021 is as under :

Liabilities	Amount	Assets	Amount
Sundry Creditors	6200	Cash	2,000
Capital :		Stock	7700
X	16800	Debtors	8800
Y	13200	Plant and Machinery	18000
Bills Payable	3300	Investments	3000
General Reserve	5000	Goodwill	5000

	44500		44500

On the above date, Z is admitted as a partner. X surrenders 1/6th of his share and Y 1/3rd of his share in favour of Z. Goodwill of the firm is valued at worth Rs. 60000. Z brings only 1/2 of his share of goodwill in cash and Rs. 15000 as his capital. The following revaluations are made :

Stock, Plant and Machinery are worth 10% less than the book value. The market value of investments is Rs. 12000. Make a provision of 5% for bad and doubtful debts on debtors and a provision of 5% for discount on creditors.

Calculate new ratio, sacrificing ratio, and prepare Revaluation A/c, Capital A/cs and the Balance Sheet of the firm as newly constituted.

The solution of Question 58 Chapter 5 – Unimax Class 12 Part 1: –

Revaluation A/c

Particulars		Rs.	Particulars	Rs.
To Stock a/c		770	By Investments a/c	9000
To Plant and Machinery a/c		1800	By Provision for creditors (5% on 6200)	310
To Provision for doubtful debts a/c (5% on 8800)		440
To Profit on revaluation a/c
X (3 : 2)	3780
Y	2520	6300

		9310		9310

Capital Accounts

Particulars	X	Y	Z	Particulars	X	Y	Z
To X’s Capital a/c	–	–	2000	By Balance b/d	16800	13200	–
To Y’s Capital a/c	–	–	4000	By G.P. A/c	3000	2000	–
To Goodwill a/c	3000	2000	–	By Cash A/c	–	–	15000
To Balance c/d	26580	23720	8000	By Premium a/c	3000	4000	–
				By Z’s Capital a/c	3000	4000	–
				By Profit on revaluation	3780	2520	–

	29580	25720	15000		29580	25720	15000

Balance Sheet

Liabilities		Rs.	Assets		Rs.
Bills Payable		3300	Stock		6930
Capital Accounts			Debtors	8800
X	26580		Less : Provision	440	8360
Y	23720		Cash (2000 + 15000 + 7000)		24000
Z	8000	58300	Plant and Machinery		16200
Creditors	6200		Investments		12000
Less : Provision for dis. On as	310	5890

		67490			67490

Working Note:

(A) Calculation of new PSR

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X’s new share = 3/5 – (1/6 X 3/5) = 3/5 – 1/10 = 5/10
Y’s new share = 2/5 – (1/3 X 2/5) = 2/5 – 2/15 = 4/15
Z’s share = 1/10 + 2/15 = 7/30
New PSR = 15 : 8 : 7
Sacrificing Ratio
X’s sacrifice = 1/6 X 3/5 = 3/30
Y’s sacrifice = 1/3 X 2/5 = 2/15
S.R. = 3 : 4