Question 68 Chapter 5 of +2- Part-

Question 68 Chapter 5 of +2-Part-1

68. (Adjustment of the capital/goodwill/revaluation A/c/ partner’s capital A/c balance sheet) The following is the balance sheet as on 31st March , 2015 of A & B, who shares profit & losses in ratio 3:2

Liabilities Rs. Assets Rs. 
Capital A/c Plant & Machinery 10,000
10,000Land & Buildings 8,000
10,000Debtors                    12,000 
General reserve  15,000Less: provision          5,100 11,000
Workmen’s compensation fund 5,000Stock   12,000
Creditors 10,000Cash  9,000
 50,000 50,000

They agreed to admit C into partnership on the following terms:
(i) Provision for doubtful debts would be increased by Rs. 2,000.
(ii) The value of land and building would be increased to Rs. 18,000.
(iii) The value of the stock would be increased by Rs. 4,000.
(iv) The liability against Workmen’s Compensation Fund is determined at Rs. 2,000.
(v) C brought in as his share of goodwill Rs.10,000 in cash.
(vi) C would bring further cash as would make his capital equal to 20% of the total capital of the new firm after the above revaluation and adjustments are carried out.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the firm after C’s admission

The solution of Question 68 Chapter 5 of +2 Part-1: –

Revaluation account
Particulars
AmountParticularsAmount
To Provision for doubtful debts 2,000By land & buildings 10,000
   By Stock 4,000
      
To Profit on revaluation
transferred to capital A/c
     
A 7,200    
B 4,80012,000   
  14,000  14,000
Partners’ Capital Account 
ParticularsABCParticularsABC
To A’s capital A/c  6,000By Balance b/d10,00010,000 
To B’s Capital A/c  4,000By General Res. A/c9,0006,000 
    By revaluation A/c7,2004,800 
    By premium A/c6,0004,000 
    By workmen’s C.F.1,8001,200 
    By Bank A/c  25,000
To Balance c/d 34,00026,00015,000    
 34,00026,00025,000 34,00026,00025,000
Balance Sheet
Liabilities
AmountAssetsAmount
Workmen’s compensation fund 2,000Cash (9000+25000) 34,000
Creditors 10,000Plant & Machinery 10,000
Capital Accounts  Land & building 18,000
A34,000 Debtors12,000 
B26,000 Less provision For debts3,00010,000
C15,00075,000Stock 16,000
      
  87,000  87,000

WORKING NOTES :

 Calculation of proportionate capital of C

Let total profits of the firm = Re 1

Share of profit given to C=1
5
Combined share of A and B=11
5
     
 =4  
  5  

Combined capitals of A and B after making allotments (34000+26000) = Rs 60,000

Raghu=Rs. 60,000x5X1
45
       
 =Rs 15,000    

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 68 Chapter 5 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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