Question 62 Chapter 5 of +2-A - T.S. Grewal 12 Class Part

Question 62 Chapter 5 of +2-A

Table of Contents

The solution of Question 62 Chapter 5 of +2-A: –

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

62. X, Y and Z are equal partners with capitals of 1,500; 1,750 and 2,000
respectively. They agree to admit W into equal partnership upon payment in cash 1,500 for 1/4th share of the goodwill and 1,800 as his capital, both sums to remain in the business. The liabilities of the old firm amounted to 3,000 and the assets, apart from cash, consist of Motors 1,200, Furniture 400, Stock 2,650 and Debtors 3,780. The Motors and Furniture were revalued at 950 and 380 respectively.
Pass Journal entries to give effect to the above arrangement and also show Balance Sheet of the new firm.

The solution of Question 62 Chapter 5 of +2-A: –

Balance Sheet
Liabilities		Amount	Assets	Amount
Other Liabilities		3,000	Motors	1,200
			Furniture	400
Capital:			Stock	2,650
X’s Capital A/c	1,500		Debtors	3,780
Y’s Capital A/c	1,750		Cash (Bal. Fig.)	220
Z’s Capital A/c	2,000	5,250
		8,250		8,250

Date	Particulars		L.F.	Debit	Credit
	Cash A/c	Dr		18,000
	To W’s Capital A/c				30,000
	To Premium for Goodwill A/c				18,000
	(Being W brought his share of goodwill and capital in cash)
	Premium for Goodwill A/c	Dr		18,000
	To X’s Capital A/c				30,000
	To Y’s Capital A/c				18,000
	To Z’s Capital A/c				12,000
	(Being Premium for goodwill distributed between X, Y and Z in sacrificing ratio i.e. 1:1:1)
	Revaluation A/c	Dr		270
	To Motors A/c				250
	To Furniture A/c				20
	(Being Decrease in value of Motors and Furniture transferred to Revaluation Account)

Case A

Date	Particulars		L.F.	Debit	Credit
	X’s Capital A/c	Dr		90
	Y’s Capital A/c	Dr		90
	Z’s Capital A/c	Dr		90
	To Revaluation A/c				270
	(Being Loss on revaluation transferred to Capital Account in the sacrificing ration i.e. 1:1:1)

Balance Sheet
Liabilities		Amount	Assets		Amount
Other Liabilities		3,000	Motors	(1,200 – 250)	950
			Furniture	(400 – 20)	380
Capital:			Stock		2,650
X’s	1,500 – 90 + 500 =1,910		Debtors		3,780
Y’s	1,750 – 90 + 500 =2,160		Cash	(220 + 3,300)	3,520
Z’s	2,000 – 90 + 500 =2,410
W’s	1,800	8,280
		11,280			11,280

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

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Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
Chapter No. 3 – Goodwill: Nature and Valuation
Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
Chapter No. 5 – Admission of a Partner
Chapter No. 6 – Retirement/Death of a Partner
Chapter No. 7 – Dissolution of a Partnership Firm

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

Chapter No. 8 – Company Accounts – Accounting for Share Capital
Chapter No. 9 – Company Accounts – Issue of Debentures
Chapter No. 10 – Redemption of Debentures

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

Chapter No. 1 – Financial Statements of a Company
Chapter No. 2 – Financial Statement Analysis
Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
Chapter No. 4 – Accounting Ratios
Chapter No. 5 – Cash Flow Statement

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