Question 61 Chapter 5 of +2-Part-1
61. ( Capital to be adjusted on the basis of New Partner’s Share) A & B are partners in the firm sharing profit & losses in the ratio 3: 2. their balance sheet on 1st, January 2018 was as follows :
| Liabilities | Rs. | Assets | Rs. | |
| Sundry Creditors | 15,000 | Pant | 30,000 | |
| Capital A/c | Patents | 10,000 | ||
| A | 30,000 | Stock | 20,000 | |
| B | 25,000 | Debtors | 18,000 | |
| 55,000 | Cash | 2,000 | ||
| General reserve | 10,000 | |||
| 80,000 | 80,000 |
C is admitted as a partner on the above date on the following terms: (1) He will pay Rs. 10,000 as goodwill for one-fourth share in the profits of the firm.
(ii) The assets are to be valued as under. Plant at Rs. 32,000; Stock at Rs. 18,000; Debtors at book figure less a provision of 5per cent for doubtful debts.
(iii) It was found that creditors included a sum of Rs. 1,400 which was not to be paid. But it was also found that there was a liability for compensation to workers amounting to Rs. 2,000.
(iv) C was to introduce 20,000 as capital and the capitals of the other partners were to be adjusted in the new profit-sharing ratio. For this purpose, current accounts were to be opened. Give journal entries to record the above and the balance sheet after C’s admission (ledger accounts are not required).
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The solution of Question 61 Chapter 5 of +2 Part-1: –
| Journal | |||||
| Date | Particulars |
L.F. | Debit | Credit | |
| Cash A/c | Dr. | 30,000 | |||
| To C’s capital A/c | 20,000 | ||||
| To Premium for Goodwill A/c | 10,000 | ||||
| (Being amount brought in by C as his capital and share of goodwill) | |||||
| Premium A/c | Dr. | 10,000 | |||
| To A’s Capital A/c | 6,000 | ||||
| To B’s Capital A/c | 4,000 | ||||
| (Being amount of goodwill transferred to the capital A/c of old partners in the ratio of their sacrifice Ratio i.e., 3:2) | |||||
| Revaluation A/c | Dr. | 4,900 | |||
| To Workers Compensation Payable A/c | 2,000 | ||||
| To Stock | 900 | ||||
| To provisional for doubtful debts A/c) | 2,000 | ||||
| (Being decrease in the value of various assets on C’s admission) | |||||
| Plant A/c | Dr. | 2,000 | |||
| Sundry creditors | Dr. | 1,400 | |||
| To Revaluation A/c | 3,400 | ||||
| (Being the increase in the value of the plant & decrease in the value of liabilities on C’s admission ) | |||||
| A’s Capital A/c | Dr. | 900 | |||
| B’s Capital A/c | Dr. | 600 | |||
| To Revaluation A/c | 1,500 | ||||
| (Being the profit on revaluation transferred to capital A/c of the old partners in the old sharing ratio ) | |||||
| General reserve | Dr. | 10,000 | |||
| To A’s capital A/c | 6,000 | ||||
| To B’s Capital A/c | 4,000 | ||||
| (Being general reserve distributed among old partners in their old profit sharing ratio ) | |||||
| A’s capital A/c | Dr. | 5,100 | |||
| To A’s current A/c | 5,100 | ||||
| (Being General reserve distributed) | |||||
| B’s capital A/c | Dr. | 8,400 | |||
| To B’s current A/c | 8,400 | ||||
| (Being excess of the capital A/c transferred to the current A/c | |||||
| Balance Sheet |
|||||
| Liabilities |
Amount | Assets | Amount | ||
| Sundry Creditors | 13,600 | 32,000 | |||
| Work compensation payable A/c | 2,000 | Debtors | 18,000 | ||
| Current A/c s | (-) Prov. For D/D | 900 | 17,100 | ||
| A | 5,100 | Stock | 18,000 | ||
| B | 8,400 | 13,500 | Patents | 10,000 | |
| Capital A/c | Cash | 32,000 | |||
| A | 36,000 | ||||
| B | 24,000 | ||||
| C | 20,000 | 80,000 | |||
| 1,09,100 | 1,09,100 | ||||
Working Note:
Calculation of New Profit Sharing Ratio:
Remaining Share for Old partners = Total Profit – Share of New Partner
= 1 – 1/4
=4-1/4
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=3/4
Now, Distribute the remaining share among old Partners :
New Share of Partner = Remaining Share X Old Share of Partner
New Share of A = 3/4 X 3/5
= 9/20
New Share of B = 3/4 X 2/5
= 6/20
Now make the same denominator of All partners
So, C’s New Ratio = 1/4 X 5/5
= 5/20
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New Profit Sharing Ratio = 9:6:5
Now, Calculate the Closing balance of A and B capital according to the new profit-sharing ratio
So, Firstly Calculate:
Total Capital of Firm = Amount invested by the New Partner X Reciprocal of Share of New Partner
= 20,000 X 4/1
= 80,000/-
Now Calculate:
A’s New Capital Balance = Total Capital of Firm X A’s New Share
= 80,000 X 9/20
= 36,000/-
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B’s New Capital Balance = Total Capital of Firm X B’s New Share
= 80,000 X 6/20
= 24,000/-
Now according to the question, we have to adjust the capital balance with the current account.
| Partner’s Capital A/c |
|||||||
| Particulars | A | B | C | Particulars | A | B | C |
|
To P/L App. (Loss) |
900 |
600 |
– |
By Bal. B/d |
30,000 |
25,000 |
– |
|
By Bank a/c |
– |
– |
20,000 |
||||
|
By Goodwill |
6,000 |
4,000 |
– |
||||
|
By General Res. |
6,000 |
4,000 |
– |
||||
|
To Current A/c (B.Fig) |
5,1,00 |
8,400 |
– |
||||
|
To Bal. c/d |
36,000 |
24,000 |
20,000 |
||||
|
42,000 |
33,000 |
20,000 |
42,000 |
33,000 |
20,000 |
||
Comment if you have any questions.
End of Solution
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Question 52 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)
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)
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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)
Check out Part 2 of both books.
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1. Accountancy – Part 2 Class 12 – Session 2024-25 By Usha Publication
2. Advanced Accountancy Part 2 Class 12 by Unimax Publication