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Question 70 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 70 Chapter 5 of +2-A
Question No.70 Chapter No.5 - T.S. Grewal +2 Book 2019-Solution

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Question 70 Chapter 5 of +2-A

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70. On 31st March, 2017, the Balance Sheet of Abhir and Divya, who were sharing profits in the ratio of 3 : 1 was as follows:

Liabilities  Assets  
Creditors 2,20,000Cash at Bank 1,40,000
Employees’ Provident Fund 1,00,000Debtors6,50,000 
Investment Fluctuation Fund 1,00,000Less: Provision for Bad Debts50,0006.00,000
General Reserve 1,20,000Stock 3,00,000
Capitals:  nvestments (Market value 4,40,000) 5,00,000
Abhir6,00,000    
Divya4,00,00010,00,000   
  15,40,000  15,40,000

They decided to admit Vibhor on 1st April, 2017 for 1/5th share.
(a) Vibhor shall bring 80,000 as his share of goodwill premium.

(b) Stock was overvalued by 20,000.
(c) A debtor whose dues of 5,000 were written off as bad debts, paid 4,000 in full settlement.
(d) Two months’ salary @ 6,000 per month was outstanding.
(e) Vibhor was to bring in Capital to the extent of 1/5th of the total capital of the new firm. Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the reconstituted firm.

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The solution of Question 70 Chapter 5 of +2-A: –

Revaluation Account
Liabilities
AmountAssetsAmount
To Stock A/c 20,000By Cash A/c 4,000
To Outstanding Salary A/c (6,000 × 2) 12,000   
   Loss transferred to  
   Abhir’s Capital A/c21,000 
   Divya’s Capital A/c7,00028,000
  32,000  32,000

 

Partners’ Capital Account
the year ended 31st March, 2019

Parti
culars

Abh
ir

Div
ya
Vib
hor

Partic
ulars

Abh
ir
Div
ya
Vib
hor
To Revaluation A/c (Loss)21,0007,000By Balance B/d6,00,0004,00,000
    By Cash A/c3,03,000
    By Premium for GoodwillA/c60,00020,000
    By Investment Fluctuation 30,000 10,000 Fund A/c (1,00,000 – 40,00030,00030,000
    

By General Reserve A/c

90,00030,000 
To Balance c/d 7,59,000
4,53,0003,03,000    
 7,80,0004,60,0003,03,000 7,80,0004,60,0003,03,000

 

 

Balance Sheet
Liabilities
AmountAssetsAmount
Employee’s Provident Fund 1,00,000Cash at Bank(1,40,000 + 4,000 + 3,03,000 + 80,000)5,27,000
Creditors 2,20,000Debtors6,50,000 
Outstanding Salary 12,000Less: Provision for Doubtful Debt50,0006,00,000
Capital:  Stock 2,80,000
Abhir7,59,000 Investments 4,40,000
Divya4,53,000    
Vibhor3,03,00015,15,000   
  18,47,000  18,47,000

Working Note:-

Calculation of New profit-sharing ratio

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Remaining share=11
5
 =5 – 1 
5

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 =4
 5

 

To Calculate to New Ratio distribute the remaining share in the old ratio of old partners’

New Ratio = Combined share of A and B X Old Ratio

Abhir’s New Share of Profits=3X4
55
 =12
 25
Divya’s Sacrificing Ratio=2X4
55
 =8
 25
Vibhor’s New Ratio=1X5
55
 =5
 25

 

New Profit sharing Ratio between Abhir : Divya : Vibhor = 12 : 8 : 5

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Calculation of Vibhor’s Capital

Total Adjusted Capital of the Old Partners=Abhir’s Capital + Divya’s Capita
Total Adjusted Capital of the Old Partners=(7,59,000 + 4,53,000)
 =12,12,000

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Combined New Share of the Old Partner=12+8
2525
 =20
 25
Total Capital of the firm=(Adjusted Capital of the Old Partners × Reciprocal of Combined New Share of the Old Partners)
 =(12,12,000 × 25/20)
 =15,15,000
Vibhor’s Capital=Total Capital of the firm × His Profit share
 =(15,15,000 × 1/5)
 =3,03,000

 

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)

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

+2 Book 1-min
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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