Question 59 Chapter 5 of +2-Part-1
59. (Adjustment of the capital on the basis of NPS ) a & b sharing profit in the proportion of three fourth showed the following as their balance sheet on 31ST MARCH, 2018
|Creditors||37,500||Cash at bank||22,500|
|General Reserve||4,000||Bills receivable||3,000|
|Land & Building||25,000|
They admit C into the partnership on 1st April 2018 on the following terms:
1. That C pays Rs. 10,000 as his capital for a fifth share in the future profits.
2. That goodwill account is valued at Rs. 20,000.
3. That furniture is reduced by 10% and a reserve for doubtful debts be created at 5% on debtors.
4. That the value of land and building be appreciated by 20%.
5. That the capital accounts of all the partners be readjusted on the basis of their profit-sharing arrangements and additional amounts be debited or credited to their current accounts.
6. Interest payable is Rs. 2,000.
Open the necessary accounts to give effect to the above-mentioned items and also give the opening balance sheet of the new firm.
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The solution of Question 59 Chapter 5 of +2 Part-1: –
|To Stock A/c||100||By Land & Buildings A/c||5,000|
|To Reserve of doubtful debts||800|
|To Interest payable A/c||2,000|
|To Profit on revaluation transferred to Capital accounts|
|Partners’ Capital Account|
|To Current A/c||7,575||8,525||By Balance b/d||30,000||16,000|
|By Bank A/c||10,000|
|By C’s Current A/c||3,000||1,000|
|By Revaluation A/c||1,575||525|
|By General reserve||3,000||1,000|
|To Balance c/d||30,000||10,000||10,000|
|Balance Sheet |
|Creditors||37,500||Cash at bank||32,500|
|A||30,000||Less reserve for doubtful debts||800||15,200|
|Current Accounts||Office Furniture||900|
|A||7,575||Land & Building||30,000|
|B||8,525||16,100||C’s Current Accounts||4,000|
WORKING NOTES :
1. Calculation of new profit share ratio
Let total profits of the firm = Re 1
|Share of profit acquired by C||=||1|
|Remaining share (Joint share of A and B)||=||1||–||1|
|A‘s new share||=||3||x||4|
|B‘s new share||=||1||x||4|
New profit sharing ratio = 3 : 1 : 1
PARTNER’S CAPITALS IN THE NEW FIRM ARE = Rs. ( 30,000;10,000;10,000)
2. SACRIFICING RATIO
Sacrificing ratio = 1 : 1
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