# Question 69 Chapter 5 of +2 Part-1 – USHA Publication 12 Class Part – 1

Q-69. - CH-2 - Usha +2 Book 2018 - Solution

Question 69 Chapter 5 of +2-Part-1

69. (Adjustment of the capital to be made by Cash ) the balance sheet of X & Y who share profits and losses in the ratio 2:1 at 31-3-2019 is as follows :

 Liabilities Rs. Assets Rs. Bills payable 1,000 Cash in hand ( Cash A/c) 3,200 Workmen’s compensation reserve 3,200 Trade debtors X’s capital A/c 6,000 Less: provision 2,500 Y’s capital A/c 4,000 Stock 5,500 Investments 3,000 14,200 14,200

Z was admitted for 1/5th share on the following terms :
(a) That unaccounted accrued income of Rs.400 be accounted for
(b) That the market value of Investments is taken as Rs.4,500.
(c) That a claim on account of Workmen’s Compensation is estimated as Rs. 1,400.
(d) That a Provision for a claim against damages to be kept for Rs. 1.000.
(e) That total capital of the new firm is agreed upon Rs.18,000.
(f) That ‘Z’ should bring the necessary amount for his share of capital and Rs1,500 for his share of goodwill.
(g) That the capital of other partners are also adjusted on the basis of their new profit sharing ratio. Adjustments should be made through cash. Prepare capital A/c & balance sheet.

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The video consists solution of question numbers from 69 to 70 Chapter no. 5 class 12 of Usha publication. To check the direct solution of question no. 69 from the following video by using time stamps of the video.

## The solution of Question 69 Chapter 5 of +2 Part-1: –

 Revaluation account Particulars Amount Particulars Amount To claim for damages 1,000 By Accrued income 400 By investments 1,500 To Profit on revaluation transferred to capital A/c X 600 Y 300 900 1.900 1.900
 Partners’ Capital Account Particulars A B C Particulars A B C By Balance b/d 6,000 4,000 By revaluation A/c 600 300 By premium ( S.F. ratio 2:1) A/c 1,000 500 By workmen’s C.F. 1,200 600 By Bank A/c 800 3,600 To Balance c/d 9,600 4,800 3,600 9,600 4,800 3,600 9,600 4,800 3,600
 Balance Sheet Liabilities Amount Assets Amount Claim for damages 1,000 Cash in hand 8,500 Bills payable 1,000 Trade Debtors 3,000 Workmen’s compensation reserve 1,400 Less provision 500 2,500 Capital Accounts Investments 4,500 X’s capital 9,600 Accrued income 400 Y’s capital 4,800 Stock 5,500 Z’s capital 3,600 18,000 21,400 21,400

WORKING NOTES :

1. Calculation of new profit share ratio

Old ratio of X & Y = 2:1
Let total profits of the firm = Re 1

 Share of profit of Z = 1 5
 Remaining share (Joint share of X and Y) = 1 – 1 5 = 4 5

 X‘s new share = 2 x 4 3 5 = 8 15
 Y’s new share = 1 x 4 3 5 = 4 15
 Z’s new share = 8 15

New profit sharing ratio = 8 : 4 : 3

 X = Rs. 18,000 x 8 15 = Rs 9,600
 Y = Rs. 18,000 x 4 15 = Rs 3,600
 X = Rs. 18,000 x 3 15 = Rs 4,800

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