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Question 64 Chapter 5 – Unimax Class 12 Part 1 – 2021
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64. A, B and C are partners in a firm sharing profits and losses in the ratio of 6 : 5 : 3 respectively. Their Balance Sheet on 1st January, 2021 was as follows : –
| Liabilities | Amount | Assets | Amount |
| Sundry Creditors | 9,000 | Land and Building | 24,000 |
| Capital : | Furniture | 3,500 | |
| A | 19,000 | Stock | 14,000 |
| B | 16,000 | Debtors | 12,600 |
| C | 8,000 | Cash | 900 |
| Bills Payable | 3,000 | ||
| 55,000 | 55,000 |
They agreed to take D into partnership and give him a share of 1/8th on the following terms :
- That D should bring in Rs. 4200 as goodwill and Rs. 7000 as his capital.
- That furniture be depreciated by 12%.
- That stock be depreciated by 10%.
- That a reserve of 5% be created for doubtful debts.
- That the value of land and building be brought upto Rs. 31000.
- That after making the above adjustments the capital accounts of the old partners (who continue to share in the same proportion as before ) be adjusted on the basis of the proportion of D’s capital to his share in the business i.e. actual cash to be paid off to or brought in by the old partners as the case may be.
Give Journal Entries to record the above and Balance Sheet after D’s admission.
The solution of Question 64 Chapter 5 – Unimax Class 12 Part 1: –
Journal
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| Date | Particulars | L.F. | Debit | Credit | |
| Land and Building a/c | Dr. | 7000 | |||
| To Revaluation A/c | 7000 | ||||
| (Being value of assets increased) | |||||
| Revaluation a/c | Dr. | 2450 | |||
| To Provision for doubtful debts a/c | 630 | ||||
| To Furniture a/c | 420 | ||||
| To Stock a/c | 1400 | ||||
| (Being value of asset decreased & liabilities increased) | |||||
| Revaluation a/c | Dr. | 4550 | |||
| To A’s Capital a/c | 1950 | ||||
| To B’s Capital a/c | 1625 | ||||
| To C’s Capital a/c | 975 | ||||
| (Being profit on revaluation distributed among partners in old ratio) | |||||
| Cash a/c | 11200 | ||||
| To D’s Capital A/c | 7000 | ||||
| To Premium a/c | 4200 | ||||
| (Being capital and goodwill brought by new partners in cash) | |||||
| Premium a/c | Dr. | 4200 | |||
| To A’s Capital A/c | 1800 | ||||
| To B’s Capital A/c | 1500 | ||||
| To C’s Capital A/c | 900 | ||||
| (Being goodwill distributed among old partners in ratio) | |||||
| Cash a/c | Dr. | 625 | |||
| To C’s Capital A/c | 625 | ||||
| (Being capital brought by new partner) | |||||
| A’s Capital a/c | Dr. | 1750 | |||
| B’s Capital a/c | 1625 | ||||
| To Cash A/c | 3375 | ||||
| (Being excess of received capital withdrawn by old partners) |
Revaluation A/c
| Particulars | Rs. | Particulars | Rs. | ||
| To Provision for bad debts a/c | 630 | By Land and Building a/c | 7000 | ||
| To Furniture a/c | 420 | ||||
| To Stock a/c | 1400 | ||||
| To Profit on revaluation | |||||
| A (6 : 5 : 3) | 1950 | ||||
| B | 1625 | ||||
| C | 975 | 4550 | |||
| 7000 | 7000 |
Capital Accounts
| Particulars | A | B | C | D | Particulars | A | B | C | D |
| To Balance c/d | 21000 | 17500 | 10500 | 7000 | By Balance b/d | 19000 | 16000 | 8000 | – |
| To Cash a/c | 1750 | 1625 | – | – | By Cash a/c | – | – | – | 7,000 |
| By Cash a/c | – | – | 625 | – | |||||
| By Premium A/c | 1800 | 1500 | 900 | – | |||||
| By Profit on rev. | 1950 | 1625 | 975 | – | |||||
| 22750 | 19125 | 10500 | 7000 | 22750 | 19125 | 10500 | 7000 |
Balance Sheet
| Liabilities | Rs. | Assets | Rs. | ||
| Bills Payable | 3000 | Land and Building | 31000 | ||
| Capital Accounts | Debtors | 12600 | |||
| A | 21000 | Less : Provision | 630 | 11970 | |
| B | 19500 | Cash (900 + 4200 + 7000 + 625 – 1750 – 1625) | 9350 | ||
| C | 10500 | Furniture | 3080 | ||
| D | 7000 | 56000 | Stock | 12600 | |
| Suresh | 9000 | ||||
| 68000 | 68000 |
Working Note:
(A) Calculation of New PSR :
Let Total Profit = 1
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D’s share = 1/8
Remaining Share = 7/8
A’s new share = 6/14 X 7/8 = 6/16
B’s new share = 5/14 X 7/8 = 5/16
C’s new share = 3/14 X 7/8 = 3/16
New PSR = 6 : 5 : 3 : 2 (New PSR)
(B) Calculation of Capitals of Partners :
Total Capital of firm = 7000 X 8/1 = Rs. 56000
(i) A’s req. capital = 6/16 X 56000 = Rs. 21000
A’s actual capital = Rs. 22750
A will withdraw Rs. 1750
(ii) B’s req. Capital = 5/16 X 56000 = Rs. 17500
B’s actual capital = Rs. 19125
B will withdraw Rs. 1625
(iii) C’s req. capital = 3/16 X 56000 = Rs. 10500
(C) Sacrificing Ratio will be 6 : 5 : 3 in case if nothing is mentioned in question except new partner’s share, it is assumed.
C’s actual capital = Rs. 9875
C will introduce = Rs. 625
(iv) D’s capital = 2/16 X 56000 = Rs. 7000
What is Partnership – Meaning and Its 4 Types
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)
- 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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication