Question 69 Chapter 5 of +2- Part-

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 payable1,000Cash in hand ( Cash A/c)3,200
Workmen’s compensation reserve3,200Trade debtors  
X’s capital A/c6,000Less: provision2,500
Y’s capital A/c4,000Stock 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.

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

Revaluation account
Particulars
AmountParticularsAmount
To claim for damages 1,000By Accrued income 400
   By investments 1,500
      
To Profit on revaluation
transferred to capital A/c
     
X600    
Y300900   
  1.900  1.900
Partners’ Capital Account 
ParticularsABCParticularsABC
    By Balance b/d6,0004,000 
    By revaluation A/c600300 
    By premium
( S.F. ratio 2:1) A/c
1,000500 
    By workmen’s C.F.1,200600 
    By Bank A/c800 3,600
To Balance c/d 9,6004,8003,600    
 9,6004,8003,600 9,6004,8003,600
Balance Sheet
Liabilities
AmountAssetsAmount
Claim for damages 1,000Cash in hand 8,500
Bills payable 1,000Trade Debtors3,000 
Workmen’s compensation
reserve
 1,400Less provision5002,500
Capital Accounts  Investments 4,500
X’s capital9,600 Accrued income 400
Y’s capital4,800 Stock 5,500
Z’s capital3,60018,000   
      
  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)=11
5
     
 =4  
  5  
X‘s new share=2x4
35
     
 =8  
 15  
Y’s new share=1x4
35
     
 =4  
 15  
Z’s new share=8  
15  

New profit sharing ratio = 8 : 4 : 3

X=Rs. 18,000x8
15
     
 =Rs 9,600  
Y=Rs. 18,000x4
15
     
 =Rs 3,600  
X=Rs. 18,000x3
15
     
 =Rs 4,800  

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 69 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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