Question 59 Chapter 6 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 59 Chapter 6 of +2- Part

Question 59 Chapter 6 of +2-Part-1

Free Accounting book Solution - Class 11 and Class 12

59. (Journal Entries/Executor’s Ale) R, S , T were partners sharing profits and losses in the ratio of 5:3:2 respectively. On 31st December 2017 their balance sheet stood as :

Liabilities  Rs. Assets  Rs. 
Sundry Creditors  55,000 Goodwill  5,000
Reserve fund   30,000 Leasehold  1,00,000
Capital A/c   Patents  30,000
R 1,50,000 Machinery   1,50,000
S 1,25,000 Stock  50,000
T 75,000 Debtors 40,000
    Cash at bank 40,000
       
  4,35,000   4,35,000

T died on 1st May 2018. It was agreed that :

  1. Goodwill valued at 2 ½ years purchase of last four years profits which were 2015- Rs. 5,000: 2015- Rs. 60,000: 2016- Rs. 80,000 and 2017- Rs. 75,000.
  2. Machinery be valued at Rs. 1,40,000 ;Patents be valued at Rs. 40,000 ; Leasehold be valued at RS. 1,25,000 on 1st May 218.
  3. For the purpose of calculating T’s share in the profits of 2018, should be taken to have served on the same sales as in 2017.
  4. A sum of Rs. 21,000 to be paid immediately to the executors of T and the balance to be paid in four equal half yearly installments together with interest at 10% per annum.
    Pass the necessary journal entries to rent the above transactions and T’s executors

The solution of Question 59 Chapter 6 of +2 Part-1: –

Journal
Date   Particulars
L.F. Debit Credit
a) R’s capital A/c Dr.   12,500  
  S’s capital A/c Dr.   7,500  
  T’s capital A/c Dr.   5,000  
  To goodwill A/c       25,000
  (Being old goodwill written off )        
           
b) R’s capital A/c Dr.   21,875  
  S’s capital A/c Dr.   13,125  
  To T’s capital A/c       35,000
  (Being goodwill adjusted )        
           
c) Revaluation A/c Dr.   10,000  
  To Machinery A/c       10,000
  (Being machinery revalued )        
           
d) Patents A/c Dr.   10,000  
  Lease hold A/c Dr.   25,000  
  To Revaluation A/c       35,000
  (Being assets revalued )        
           
e) Revaluation A/c Dr.   25,000  
  To R’s capital A/c       12,500
  To S’s capital A/c       7,500
  To T’s capital A/c       5,000
  (Being profit on revaluation distributed )        
           
f) Reserve Fund A/c Dr.   30,000  
  To R’s capital A/c       15,000
  To S’s capital A/c       9,000
  To T’s capital A/c       6,000
  (Being reserve distributed )        
           
  T’s capital A/c Dr.   1,21,000  
  To Bank A/c       21,000
  To executors loan A/c       1,00,000
  (Being cheque paid to T’s Capital)        
         

T’s Capital A/c

Particulars
Amount Particulars Amount
To goodwill A/c   5,000 By balance b/d   75,000
To bank A/c   21,000 By reserve A/c   6,000
To balance c/d   1,00,000 By profit & loss suspense A/c   5,000
      By revaluation A/c   5,000
      By R’s capital A/c   21,875
      By S’s capital A/c   13,125
    1,26,000     1,26,000

Working notes :

Calculation of goodwill = 65000+60000+80000+75000 x 2.5
4
         
  = Rs 1,75,000    

T’s share of profit for current year
Profit for 2017 ( being same for 2018 )= Rs. 75,000
Profit of frim for 4 months = 75,000 X 4/12 = Rs. 25,000
T’s share in profit = 25,000 X 2/10 = Rs. 5,000
Value of goodwill at 2 year’s purchase = 2 X 7,000 = Rs. 14,000

White’s share in goodwill = 1 x 14,000
4
         
  = Rs 3,500    

Calculation of share of profit of white till date of death
Profit average = Rs. 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

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 59 Chapter 6 of +2 Part-1 - USHA Publication 12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firm

Leave a Reply

Your email address will not be published. Required fields are marked *