Question 60 Chapter 5 of +2-Part-1
60. (Adjustment of Capital on basis of New Partner’s Share) A, B and C trading in partnership and sharing profits and losses in the proportion of 1/2, 1/3 and 1/6 respectively desire to keep up a working partner when their Balance Sheet stood as follows:
| Liabilities | Rs. | Assets | Rs. | |
| Creditors | 50,000 | Cash in hand | 8,000 | |
| Capital A/c | Debtors | 2,52,000 | ||
| A | 5,70,000 | Stock | 2,90,000 | |
| B | 3,20,000 | Machinery | 70,000 | |
| C | 1,60,000 | 10,50,000 | Land & Building | 4,80,000 |
| 11,00,000 | 11,00,000 |
They agreed to admit D into partnership and give him a share of 10 paise in the following terms
(a) That D should bring in Rs. 30,000 as goodwill and Rs. 1,28,000 as his capital.
(b) That machinery is depreciated by 12%.
(c) That stock is depreciated by 10%.
(d) That a reserve of 5% be created for doubtful debts. (That the value of land and building be brought up to Rs. 6,00,000.
(e) That after making the above adjustments the capital accounts (who continue to share in the same proportions as before) be adjusted on the of the old partners’ basis of the proportion of D’s capital to his share in the business, (i.e. actual cash to be paid off or to be brought in by old partners, as the case may be.)
(g) Prepaid salaries is Rs. 20,000.
Pass journal entries to give effect to the above and prepare the balance sheet of the firm as newly constituted. Show your work regarding the determination of the new profit sharing ratio of the partners.
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The solution of Question 60 Chapter 5 of +2 Part-1: –
| Revaluation account |
|||||
| Particulars |
Amount | Particulars | Amount | ||
| To machinery | 8,400 | By Land & Building | 1,20,000 | ||
| To Stock | 29,000 | By Prepaid salaries | 20,000 | ||
| To provisional for doubtful debts | 12,600 | ||||
| To Profit on revaluation transferred to Capital accounts | |||||
| A | 45,000 | ||||
| B | 30,000 | ||||
| C | 15,000 | 90,000 | |||
| 1,40,000 | 1,40,000 | ||||
| A’s capital account |
|||||
| Particulars |
Amount | Particulars | Amount | ||
| To Bank Account | 54,000 | By Balance b/d | 5,70,000 | ||
| To Balance c/d | 5,76,000 | By Revaluation Account | 45,000 | ||
| By Premium Account | 15,000 | ||||
| 6,30,000 | 6,30,000 | ||||
| B’s capital account |
|||||
| Particulars |
Amount | Particulars | Amount | ||
| To Balance c/d | 3,84,000 | By Balance b/d | 3,20,000 | ||
| By Revaluation Account | 30,000 | ||||
| By Premium Account | 6,000 | ||||
| By Bank Account | 24,000 | ||||
| 3,84,000 | 3,84,000 | ||||
| C’s capital account |
|||||
| Particulars |
Amount | Particulars | Amount | ||
| To Balance c/d | 1,92,000 | By Balance b/d | 1,60,000 | ||
| By Revaluation Account | 5,000 | ||||
| By Premium Account | 15,000 | ||||
| By Bank Account | 12,000 | ||||
| 1,92,000 | 1,92,000 | ||||
| D’s capital account |
|||||
| Particulars |
Amount | Particulars | Amount | ||
| To Balance c/d | 1,28,000 | By Cash Account | 1,28,000 | ||
| Balance Sheet |
|||||
| Liabilities |
Amount | Assets | Amount | ||
| Creditors | 50,000 | Cash in hand | 1,48,000 | ||
| Capital Accounts | Debtors | 2,52,000 | |||
| A | 5,76,000 | Less reserve for doubtful debts | 12,600 | 2,39,400 | |
| B | 3,84,000 | Cash at bank | 1,40,000 | ||
| C | 1,92,000 | Prepaid salaries | 20,000 | ||
| D | 1,28,000 | 12,80,000 | Stock | 2,61,000 | |
| Machinery | 61,600 | ||||
| Land & Building | 6,00,000 | ||||
| 13,30,000 | 13,30,000 | ||||
WORKING NOTES :
1. Calculation of New profit sharing Ratio
| D’s share | = | 1 |
| 10 |
| Remaining share for A,B, and C | = | 1 | – | 1 |
| 10 | ||||
| = | 9 | |||
| 10 |
Remaining share distributed among A & B,C in old profit sharing ratio
| A‘s share | = | 9 | x | 3 |
| 10 | 6 | |||
| = | 9 | |||
| 20 |
| B‘s share | = | 9 | x | 2 |
| 10 | 6 | |||
| = | 3 | |||
| 20 |
| C‘s share | = | 9 | x | 1 |
| 10 | 6 | |||
| = | 3 | |||
| 20 |
| D‘s share | = | 1 | x | 2 |
| 10 | 2 | |||
| = | 2 | |||
| 20 |
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New profit sharing ratio = 9 : 6 : 3 : 2
2. The Total Capital on the basis of D’s Capital = Rs.1,28,000X 10 = Rs. 12,80,000
2. SACRIFICING RATIO
| A’s capital | = | 12,80,000 | x | 9 |
| 20 | ||||
| = | 5,76,000 |
| B’s capital | = | 12,80,000 | x | 6 |
| 20 | ||||
| = | 3,84,000 |
| C’s capital | = | 12,80,000 | x | 3 |
| 20 | ||||
| = | 1,92,000 |
| D’s capital | = | 12,80,000 | x | 2 |
| 20 | ||||
| = | 1,28,000 |
3. Calculation of cash at bank
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| C’s capital account |
|||||
| Particulars |
Amount | Particulars | Amount | ||
| To Balance b/d | 8,000 | By A’s capital Account | 54,000 | ||
| To D’s capital A/c | 1,28,000 | By Balance c/d | 1,48,000 | ||
| To Premium Account | 30,000 | ||||
| To B’s capital A/c | 24,000 | ||||
| To C’s capital A/c | 12,000 | ||||
| 2,02,000 | 2,02,000 | ||||
Comment if you have any questions.
End of Solution
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Question 46 Chapter 5 of +2 Part-1 – USHA Publication
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Chapter-Wise Solution of Usha Publication Accountancy – Part 1 Class 12 – Session 2024-25 as per the PSEB curriculum
Check out Solutions to all questions of the every chapter shown as under. The Solution of Accountancy – Part 1 Class 12 – Session 2024-25 is provided as per the new book published by Usha Publication.
Chapter No. 1 – Accounting Not-for-Profit Organisations (Deleted from the Syllabus)
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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)
Also, Check out our Comprehensive Chapter-wise solution of Advanced Accountancy Part 1 Class 12 by Unimax Publication
- Chapter No. 1 – Accounts of Non-Profit Organisations (Deleted from the Syllabus)
- Chapter No. 2 – Partnership Accounts – I (Basic Concepts)
- Chapter No. 3 – Partnership Accounts – II (Goodwill)
- Chapter No. 4 – Partnership Accounts – III (Change in Profit Sharing Ratio among Existing Partners)
- 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)
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