Question 61 Chapter 5 - Unimax Class 12 Part 1

Question 61 Chapter 5 – Unimax Class 12 Part 1 – 2021

Table of Contents

The solution of Question 61 Chapter 5 – Unimax Class 12 Part 1: –

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

61. Black and White are partners sharing profits in the ratio of 5 : 3. They admit Green for 1/5th share in the future profits on the following conditions :

Green has to bring Rs. 12000 as his share of goodwill and to contribute proportionate capital.
Revaluation of assets and liabilities was made which resulted in profits of Rs. 6400.
Workmen compensation fund stood in the books at Rs. 4500 but the actual liability on that account is Rs. 1300 only.
General Reserve of Rs. 32000 is to be distributed.
Capitals of Black and White before admission of green were Rs. 26500 and Rs. 28300 respectively.
After admission of Green, the capitals of Black and White were to be adjusted in their profit sharing ratio, by opening current accounts.

You are required to prepare partners’ capital accounts.

The solution of Question 61 Chapter 5 – Unimax Class 12 Part 1: –

Capital Accounts

Particulars	Black	White	Green	Particulars	Black	White	Green
To Current a/c	–	7750	–	By Balance b/d	26500	28300	–
To Balance c/d	67750	40650	27100	By General Reserve	20000	12000	–
				By Profit on revaluation a/c	4000	2400	–
				By WCF a/c	2000	2400	–
				By Premium a/c	7500	4500	–
				By Cash a/c	–	–	27100
				By Current a/c	7750	–	–

	67750	48400	27100		67750	48400	27100

Working Note:

Calculation of new PSR :

Calculation of new PSR :

Green’s Share = 1/5

Remaining share = 1 – 1/5 = 4/5

Black’s new share = 5/8 X 4/5 = 5/10

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White’s new share = 3/8 X 4/5 = 3/10

Green’s share = 1/5

New PSR = Black : White : Green = 5 : 3 : 2
Calculation of Capital contributed by old partners :
Total capital of firm = (Blacks capital balance c/d + White’s capital balance c/d) X 10/8
= (60000 + 48400) X 10/8
= Rs. 135500
(i) Black’s required capital = 5/10 X 135500 = Rs. 67750
Black’s actual capital = Rs. 60000
Black’s will introduce Rs. 7750 into business. (Transferred to current a/c Dr. Balance)
(ii) White’s required capital = 3/10 X 135500 = Rs. 40650
White’s actual capital = Rs. 48400
White’s will withdraw Rs. 7750 from business. (Transferred to current a/c Cr. Balance)
(iii) Green’s required capital = 2/10 X 135500 = Rs. 27100