Question 63 Chapter 5 – Unimax Class 12 Part 1 – 2021

question 63 - UNIMAX
question 63 - UNIMAX

Question 63 Chapter 5 – Unimax Class 12 Part 1 – 2021

63. Ramesh and Rahim sharing profits and losses in the ratio of 3 : 2 admit Suresh as a partner with 1/6th share in profits. He has to contribute proportionate capital. On the date of admission, their Balance Sheet was as follows :

Liabilities Amount Assets Amount
Sundry Creditors 3559 Cash 100
Capital :   Investments 3000
 Ramesh 2800 Debtors 5750
Rahim 2200 Stock 4150
Bank Overdraft 4841 Fixtures 400
       
  13400   13400

It is agreed to make the following adjustments in the above Balance Sheet.

  1. To transfer Rs. 2000 from Suresh’s Current A/c (newly opened) to old partners’ capital A/cs for share of goodwill (Suresh is unable to bring goodwill in cash).
  2. To create a reserve at 10% on the debtors for doubtful debts.
  3. To write down Fixtures to Rs. 100.
  4. To depreciate Stock by 10%.
  5. To increase the value of investments to Rs. 3500.

The capitals of the partners were to be adjusted in profit sharing ratio. Make entries necessary to give effect to the above arrangement and prepare the amended Balance Sheet immediately after Suresh has become a partner.

The solution of Question 63 Chapter 5 – Unimax Class 12 Part 1: –

Journal

Date Particulars   L.F. Debit Credit
           
  Investments a/c Dr.   500  
  To Revaluation A/c       500
  (Being value of assets increased)        
           
  Revaluation a/c Dr.   1290  
  To Provision for doubtful debts a/c       575
  To Furniture a/c       300
  To Stock a/c       415
  (Being value of asset decreased & liabilities increased)        
           
  Ramesh’s Capital a/c Dr.   474  
  Rahim’s Capital A/c Dr.   316  
  To Revaluation a/c       790
  (Being loss on revaluation transferred to old partner’s capital a/c in old ratio)        
           
  Suresh’s Current a/c     2000  
  To Ramesh’s Capital A/c       1200
  To Rahim’s Capital a/c       800
  (Being amount of goodwill transferred to old partners’ capital a/c from Suresh’s current a/c        
           
  Cash a/c Dr.   1242  
  To Suresh’s Capital A/c       1242
  (Being capital introduced by new partner)        
           
  Cash a/c Dr.   200  
  To Ramesh’s Capital A/c       200
  (Being capital introduced by old partner)        
           
  Rahim’s Capital a/c Dr.   200  
  To Cash A/c       200
  (Being capital withdrawn by old partner from the business)        

Revaluation A/c

Particulars Rs. Particulars   Rs.
To Provision for bad debts a/c 575 By Investments a/c   500
To Furniture a/c 300 By Loss on revaluation    
To Stock a/c 415 Ramesh ( 3 : 2 ) 474  
    Rahim  316 790
         
  1290     1290

Capital Accounts

Particulars Ramesh Rahim Suresh Particulars Ramesh Rahim Suresh
To Loss on revaluation 474 316 By Balance b/d 2,800 2,200
To Cash a/c 200 By Suresh current a/c 1,200  800
To Balance c/d  3,726 2,484 1,242 By Cash a/c 200
        By Cash a/c 1,242
               
  4,200 3,000 1,242   4,200 3,000 1,242

Balance Sheet

Liabilities   Rs. Assets   Rs.
Bank overdraft   4841 Suresh current a/c   2,000
Capital Accounts     Debtors 5,750  
Ramesh 3726   Less : Provision 575 5,175
Rahim 2484   Cash (100 + 1242 + 200 -200)   1,342
Suresh 1242 7452 Investments   3,500
Suresh   3559 Stock   3,735
      Fixtures   100
           
    15,852     15,852

Working Note:

Sacrificing Ratio = 3 : 2 if nothing has been mentioned in partnership deed except new partner’s share (it is assumed)

Advertisement-X

(A) Calculation of Capital contributions by partners :

Total Capital of firm = (Ramesh capital balance c/d + Rahim’s capital balance c/d) X 6/5

= (3526 + 2684) X 6/5
= Rs. 7452

(i) Ramesh’s required capital = 3/6 X 7452 = Rs. 3726

Ramesh’s actual capital = Rs. 3526

Ramesh’s will introduce Rs. 200 in business

(ii) Rahim’s required capital = Rs. 2/6 X 7452 = Rs. 2484

Rahim’s actual capital = Rs. 2684
Rahim’s will withdraw Rs. 200 from business

(iii) Suresh’s capital = 1/6 X 7452 = Rs. 1242

(B) New PSR :

Advertisement-X

Let total share = 1
Suresh share = 1/6 Remaining share = 1 – 1/6 = 5/6
Ramesh’s new share = 3/5 X 5/6 = 3/6
Rahim’s new share = 2/5 X 5/6 = 2/6
Suresh’s share = 1/6

New PSR = 3 : 2 : 1 Ans.

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

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)

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

Advertisement

error: Content is protected !!