Question 61 Chapter 6 of +2- Part

Question 61 Chapter 6 of +2-Part-1

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 :

LiabilitiesRs. Assets Rs. 
Capital A/c   Cash at bank17,000
A25,000Debtors                     30,000 
B30,000Less : provision          2,00028,000
C15,000Stock12,000
Reserve9,000Equipment 15,000
Creditors21,000Building50,000
Bank Loan30,000Goodwill 12,000
Salary due 10,000Advertisement suspense8,000
 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
AmountParticularsAmount
To debtors A/c 2,000   
To stock A/c 1,000   
   By loss on revaluation   
   A1,000 
   B1,000 
   C1,0003,000
  3,000  3,000
Partners’ Capital Account 
ParticularsABCParticularsABC
To revaluation A/c1,0001,0001,000By Balance b/d2500030,00015,000
To goodwill A/c4,0004,0004,000By Reserve A/c3,0003,0003,000
To adv. Suspense A/c2,0002,0002,000By A’s capital A/c  5,333
To c’s capital A/c5,3335,334 By B’s capital A/c  5,334
To c’s executors A/c  23,889By P & L suspense A/c  2,222
To Balance c/d 15,66720,666    
 28,00033,00030,889 28,00033,00030,889

Working Notes :

Calculation of profit to C

Years Profit
2016-17Profit 30,000+10,00040,000
2015-16Loss(-,9000)
2014-15Profit 20,000-3,00017,000
  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.DebitCredit
a)A’s capital A/cDr. 5,333 
 B’s capital A/cDr. 5,334 
 To C’s capital A/c   10,667
 (Being goodwill adjusted )    
     
C’s executors A/c
DateParticulars
AmountParticularsAmount
31-8-17To cash A/c 10,000By C’s capital A/c 23,889
28-2-18To stock A/c 1,000By interest A/c 833
   24,722  24,722
Balance Sheet
Liabilities
AmountAssetsAmount
Capital A/c  Cash at bank 7,000
A 15,667Debtors30,000 
B 20,666Less Provision4,00026,000
C’s executor 13,889Stock 11,000
Creditors 21,000Equipment 15,000
BANK Loan 30,000Building 50,000
Salary due 10,000P & 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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