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Question 70 Chapter 6 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 70 Chapter 6 of +2-A
Question No.70 Chapter No.6 - T.S. Grewal +2 Book 2019-Solution

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Question 70 Chapter 6 of +2-A

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70. A B and C were partners in a firm sharing profits in the ratio of 5 : 3: 2. On 31st March 2018, their Balance Sheet was as follows:

Liabilities Amount AssetsAmount
Creditors 11,000Building 20,000
Reserves 6,000Machinery30,000
A’s Loan A/c 5,000Stock10,000
Capital A/cs:  Patents11,000
25,000 Debtors8,000
25,000 Cash 8,000
15,000   
  87,000 87,000

A died on 1st October 2018. It was agreed among his executors and the remaining partners that:
i Goodwill to be valued at 212 years’ purchase of the average profit of the previous 4 years, which were 2014-15: 13,000; 2015-16: 12,000; 2016-17: 20,000 and 2017-18: 15,000.
ii Patents be valued at 8,000; Machinery at 28,000; and Building at 25,000.
iii Profit for the year 2017-18 be taken as having accrued at the same rate as that of the previous year.
iv Interest on capital be provided @ 10% p.a.
v Half of the amount due to A to be paid immediately to the executors and the balance transferred to his Executors’ Loan Account. Prepare A’s Capital Account and A’s Executors’ Account as on 1st October 2018.

The solution of Question 70 Chapter 6 of +2-A: –

 

A’s Capital Account
Particular
AmountParticularAmount
To Bank A/c28,450By Balance b/d25,000
To A’s Executors A/c28,450By Reserve3,000
  By B’s Capital A/c Goodwill11,250
   By C’s Capital A/c Goodwill 7,500
   By Profit & Loss Suspense 3,750
   By Interest on Capital WN2 1,250
   By A’s Loan A/c WN6 5,150
  56,900  56,900

 

A’s Executors Account
Particular
AmountParticularAmount
To Bank A/c28,450By Balance b/d56,900
To A’s Executors A/c28,450  
      
  56,900  56,900

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Working Notes:

Calculation of Share in Reserve

 

 =6,000X5
10
     
 =Rs 3,000  

 


Calculation of Interest on Capital

 =25,000X6X10
10012
       
 =Rs 1,250    

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Calculation of Profit & Loss Suspense

Profit & loss Suspense=15,000X5X6
10012
       
 =Rs 3,750    

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Calculation of Share in Revaluation Profit/Loss

Revaluation=Nil(−3,000−2,000+5,000)

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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