Question 61 Chapter 6 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 61 Chapter 6 of +2- Part

Question 61 Chapter 6 of +2-Part-1

Free Accounting book Solution - Class 11 and Class 12

61. (Revaluation A/c/Capital A/c Executor A/c/B/S) The balance sheet of A , B & C is given at 31-3-2017 :

Liabilities Rs.  Assets  Rs. 
Capital A/c     Cash at bank 17,000
A 25,000 Debtors                     30,000  
B 30,000 Less : provision          2,000 28,000
C 15,000 Stock 12,000
Reserve 9,000 Equipment  15,000
Creditors 21,000 Building 50,000
Bank Loan 30,000 Goodwill  12,000
Salary due  10,000 Advertisement suspense 8,000
  1,40,000   1,40,000

C died on 31-8-17. As per the deed the goodwill is to valued two times of average profits. The profits for last three years are following for the purpose of goodwill,
2016-17 Profit Rs. 30,000 (after loss on sale of building Rs. 10,000)
2015-16 Loss Rs. 9,000
2014-15 Profit Rs. 20,000 (after profit on sale of plant Rs.3,000)
Debtors are valued Rs. 26,000 ;Stock Rs. 11,000;
Profits of C are to be calculated on the basis of average profits of last three years.
C was paid Rs. 10,000 immediately and the balance was paid after six months with 12% interest. Prepare C’s executorr’s account and balance sheet as un 31-8-2017.

The solution of Question 61 Chapter 6 of +2 Part-1: –

Revaluation A/c
Particulars
Amount Particulars Amount
To debtors A/c   2,000      
To stock A/c   1,000      
      By loss on revaluation    
      A 1,000  
      B 1,000  
      C 1,000 3,000
    3,000     3,000
Partners’ Capital Account 
Particulars A B C Particulars A B C
To revaluation A/c 1,000 1,000 1,000 By Balance b/d 25000 30,000 15,000
To goodwill A/c 4,000 4,000 4,000 By Reserve A/c 3,000 3,000 3,000
To adv. Suspense A/c 2,000 2,000 2,000 By A’s capital A/c     5,333
To c’s capital A/c 5,333 5,334   By B’s capital A/c     5,334
To c’s executors A/c     23,889 By P & L suspense A/c     2,222
To Balance c/d 15,667 20,666        
  28,000 33,000 30,889   28,000 33,000 30,889

Working Notes :

Calculation of profit to C

Years   Profit
2016-17 Profit 30,000+10,000 40,000
2015-16 Loss (-,9000)
2014-15 Profit 20,000-3,000 17,000
    48,000
Average profit = 48,000
3
     
  = 16,000

C’s share in profit = 16,000 X (5/12) X (1/3) = 2,222

Calculation of the Goodwill

Average Profit = 16,000
Goodwill = Average profit X No. of Year’s purchase = 16000 X 3 = 32,000
C’s share = 32,000 X 1/3 = 10,667

Journal
Date   Particulars
L.F. Debit Credit
a) A’s capital A/c Dr.   5,333  
  B’s capital A/c Dr.   5,334  
  To C’s capital A/c       10,667
  (Being goodwill adjusted )        
         
C’s executors A/c
Date Particulars
Amount Particulars Amount
31-8-17 To cash A/c   10,000 By C’s capital A/c   23,889
28-2-18 To stock A/c   14,722 By interest A/c   833
      24,722     24,722
Balance Sheet
Liabilities
Amount Assets Amount
Capital A/c     Cash at bank   7,000
A   15,667 Debtors 30,000  
B   20,666 Less Provision 4,000 26,000
C’s executor   13,889 Stock   11,000
Creditors   21,000 Equipment   15,000
BANK Loan   30,000 Building   50,000
Salary due   10,000 P & L Suspense A/c   2,222
    1,11,222     1,11,222

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

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