Question 69 Chapter 5 - Unimax Class 12 Part 1

Question 69 Chapter 5 – Unimax Class 12 Part 1 – 2021

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The solution of Question 69 Chapter 5 – Unimax Class 12 Part 1: –

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

69. Ram, Rahim and Jakob are equal partners in firm. Their Balance Sheet as at 31st March, 2021 was as follows :

Liabilities	Amount	Assets	Amount
Sundry Creditors	27,000	Goodwill	1,17,000
Capital :		Building	1,25,000
Ram	2,17,000	Machinery	72,000
Rahim	1,66,000	Furniture	24,000
Jakob	90,000	Stock	1,14,000
Employees provident fund	6,000	Bad debts	1,02,000
Bills payable	45,000	Cash	12,000
General Reserve	15,000

	5,66,000		5,66,000

On that date, they agreed to take David as an equal partner on the following terms :

David will bring in Rs. 160000 as his capital and Goodwill. His share of goodwill is valued at Rs. 60000.
The goodwill account appearing in the books is to be written off before admission.
Provision for loss of stock and a provision for doubtful debts is to be made at 10% and 5% respectively.
The value of Building is to be taken at Rs. 200000.
The total capital of the new firm had been fixed at Rs. 400000 and the capital accounts of partners are to be adjusted in their profit sharing ratios. Any excess is to be transferred to current account or deficit to be introduced in cash.

Prepare the Revaluation Account, Capital Accounts and Balance Sheet of the new firm.

The solution of Question 69 Chapter 5 – Unimax Class 12 Part 1: –

Revaluation A/c

Particulars		Rs.	Particulars	Rs.
To Provision for stock a/c		11,400	By Building a/c	75,000
To Provision for bad debts a/c		5,100
To Profit on revaluation
Ram	19,500
Rahim (1 : 1 : 1)	19,500
Jacob	19,500	58,500

		75,000		75,000

Capital Accounts

Particulars	Ram	Rahim	Jacob	David	Particulars	Ram	Rahim	Jacob	David
To Ashok’s Capital a/c	39,000	39,000	39,000	–	By Balance b/d	2,17,000	16,6000	90,000	–
To Kishore’s Capital a/c	1,22,500	71,500	–	–	By General res.	5,000	5,000	5,000	–
To Balance c/d	1,00,000	1,00,000	1,00,000	1,00,000	By Profit on rev.	19,500	19,500	19,500	–
					By Cash a/c	–	–	–	1,00,00
					By Premium A/c	20,000	20,000	20,000	–
					By Cash a/c	–	–	4,500	–

	2,61,500	2,10,500	1,39,000	1,00,000		2,61,500	2,10,500	1,39,000	1,00,000

Balance Sheet

Liabilities		Rs.	Assets		Rs.
Employees Provident Fund		6,000	Cash (12000 + 160000 + 4500)		1,76,500
Capital Accounts			Building		2,00,000
Ram	1,00,000		Stock	1,14,000
Rahim	1,00,000		Less : Provision	11,400	1,02,600
Jacob	1,00,000		Book debts	1,02,000
David	1,00,000	4,00,000	Less Provision	5,100	9,69,00
Bills Payable		45,000	Machinery		7,20,000
Ram’s Current a/c		1,22,500	Furniture		24,000
Sundry Creditors		27,000
Rahim’s Current a/c		71,500

		6,72,000			6,72,000

Working Note:

Calculation of req. Capitals of Partners :
Total capital of firm = Rs. 400000
PSR = 1 : 1 : 1 : 1
(i) Ram’s required cap. = 400000 X 1/4 = Rs. 100000
Ram’s actual required capital = Rs. 222500
Ram’s will withdraw = Rs. 122500 (Transferred to current a/c)
(ii) Rahim’s required cap. = 400000 X 1/4 = Rs. 100000
Rahim’s actual capital = Rs. 171500
Rahim’s will withdraw = Rs. 71500 (Transferred to current a/c)
(iii) Jacob’s required cap. = 400000 X 1/4 = Rs. 100000
Jacob’s actual capital = Rs. 95500
Jacob’s will introduce = Rs. 4500. (Transferred to current a/c)