Question 62 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 62 Chapter 5 of +2-A

Question 62 Chapter 5 of +2-A

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)

  • 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)

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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2 Book 1 min - Question 62 Chapter 5 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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